(Bloomberg) – Tesla Inc. shares in late trading as a record quarter deliveries eased the worst fears of demand for Elon Musk-led company's electric vehicles.
The Model 3 manufacturer delivered 95,200 cars to customers in the three months ending June, which exceeded the previous best mark in the last quarter of 2018. Tesla's delivery number exceeded anything other than an analyst's estimate in a Bloomberg News survey.
Tesla shares soared by 9.1% in late trading Tuesday in New York, which would be the biggest gain in 2019 on a closing basis. The shares were down 33% for the year through the end of ordinary trading, partly because demand is that the company's billionaire manager has repeatedly disputed.
While the results go far in contrast to Tesla's doubts, seeing if this level of demand remains sustainable – or profitable. The $ 3,750 US federal tax credit purchases were eligible for cuts by mid-July 1, and deliveries tailed by the last time the incentive shrank. Musk has also said that the company will make a loss for the quarter and then report positive earnings in the second half.
Tesla also left its statement on the entire annual report for 360,000 to 400,000 deliveries, a projection it re-confirmed in its release one quarter ago. Tesla representatives did not respond when asked if the company provided their guidance. On average, it will need more than 100,000 units in the second half to reach the low end of the range.
"Tesla's stock and future are all on sustainable demand ahead and elusive profitability," Dan Ives, an analyst at Wedbush Securities, wrote in a report.
& # 39; All Out & # 39;
Musk, 48, urged employees to "go out" in the last few days of Tesla's first full quarter where the Model 3s made their way to buyers in Europe and China. Overseas demand contributed to the supply of sedan shopping to 77,550 units, more than all Tesla vehicles delivered in the first quarter.
"The big picture is that something is happening around electric cars," said Gene Munster, a managing partner of venture capital firm Loup Ventures and longtime Tesla bull. "Model 3 is on fire."
Several analysts claimed their delivery estimates as the quarter ended, citing gross sales to key European markets, including Norway and the Netherlands, as well as the effect of incentives that Canada began offering in May to fuel the purchase of battery-powered cars. Tesla does not break down deliveries by region in the release.
One reason why Wall Street remains concerned with Tesla's profitability is shrinking demand for the higher margin model S and Model X. Combined delivery fell to 17,650 in the quarter, down more than 20% from a year ago. Investors are concerned that the cheaper model 3 can cannibalize the company's more lucrative vehicles.
With the US federal tax credit for the second half and ending in 2020, Tesla must also have to lean more in overseas markets to bend sales. It will test the California-based company's ability to keep shipping and logistics costs.
Tesla builds a car and battery assembly plant near Shanghai, and Musk has said he hopes to pick a location for a similar factory in Europe by the end of the year.
"We have made significant strides in streamlining our global logistics and delivery operations in higher volumes, so that cost efficiency and improvements in our working capital position can be made," Tesla said in his statement.
Lack of competition
Tesla also said that orders exceeded deliveries in the quarter, and it expects to increase production and transfer more cars over the next three months. The number of vehicles in transit at the end of June was over 7,400.
Tesla Model 3 sales are far ahead of competitors. General Motors Co. sold just 3,965 of its all-electric Chevrolet Bolt in the second quarter, while Volkswagen AG's Audi only delivered 1,835 battery-powered E-Tron SUVs.
"Tesla has built a phenomenal brand," said Michelle Krebs, an analyst at car shopping researcher Autotrader. "When you think of electric cars, think of Tesla. The competition isn't really out there yet. It's a segment of the population who just wants to buy a Tesla because they like the brand and they won't look at anything else."  (Updates with merit for profit in fourth paragraph.)
– With help from David Welch and Gabrielle Coppola.
To contact the reporter on this story: Dana Hull in San Francisco at firstname.lastname@example.org
To contact the editors responsible for this story: Craig Trudell at email@example.com, Melinda Grenier, David Welch
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