A Tesla vehicle is displayed in a store in Chaoyang district, Beijing. Photo: Zhang Hongpei/GT

 

Tesla Inc has set a record for quarterly vehicle deliveries in a triumphant response to months of questions about demand for its luxury electric cars.

Tesla did not comment on profit - which is still elusive - but the robust deliveries could help jumpstart investor sentiment on Tesla, which has been challenged in recent months.

Brushing aside concerns about demand that have dogged the company all year, Tesla said orders during the second quarter exceeded deliveries, despite buyers getting a smaller US tax credit.

A $7,500 US federal tax credit was cut in half at the end of last year, fell to $1,875 on Monday and expires at the end of the year.

"We believe we are well-positioned to continue growing total production and deliveries" in the third quarter, the company said in a statement.

Tesla delivered 77,550 Model 3s in the quarter, compared with analysts' average estimate of 73,144, according to IBES data from Refinitiv.

Deliveries of all models rose 51 percent from the first quarter to 95,200 vehicles, including 17,650 Model S and X. Analysts on average were expecting total deliveries of 89,084.

Chief Executive Officer Elon Musk repeatedly said Tesla could deliver a record number of cars in the second quarter, beating the 90,700 it sent to customers in the final quarter of last year.

The delivery numbers, released on Tuesday, helped take the sting off a difficult first quarter, in which deliveries plunged and the company lost $702 million.

That quarter - hurt by logistics issues at Tesla's international ports and a drop-off in US orders after the tax credit was halved - spurred worries that Tesla may have tapped a limited market for electric cars at premium prices.

Some analysts skeptical

Despite the positive second-quarter delivery numbers, Wedbush analyst Dan Ives cautioned that "the Street remains skeptical."

Demand and profitability will remain the two main drivers to buoy Tesla shares in coming quarters, said Ives, signaling that Tesla's challenges are far from over.

Garrett Nelson of CFRA Research noted that second-quarter deliveries were likely artificially boosted by customers pulling forward their vehicle purchases before the tax credit cut on Monday, warning that could result in a "significant retracement" in deliveries in the third quarter.

Tesla did not repeat its prior forecast that it would post a second-quarter loss but return to profit in the third quarter.

A big challenge for Tesla has been how to deliver its vehicles efficiently and swiftly to customers around the world. An improved system for logistics helped in the second quarter, Tesla said, without providing more detail.

In prior quarters, Tesla diverted employees from all parts of the company to meet delivery goals. That has proved to be an expensive and inefficient way to meet targets, because it reduces potential profit margins on each vehicle.

The delivery numbers included 10,600 vehicles that had been in transit at the end of the first quarter.

The company has pledged to deliver 360,000 to 400,000 vehicles in 2019, a goal many analysts predict will be difficult to meet.

Overall, total production rose 13 percent to 87,048 vehicles compared with the first quarter. The company made 72,531 Model 3s in the second quarter, up from a total of 62,950 Model 3s in the preceding quarter.

Tesla said that it would no longer disclose how many vehicles were in transit at the end of each quarter due to production changes that made the number less relevant. At the end of the second quarter, more than 7,400 vehicles were in transit.

Tesla's Shanghai factory will start production by the end of this year with capacity to build 3,000 vehicles per week, said Ma Chunlei, director of Shanghai's development and reform commission.

Tesla is expected to deliver domestically made Model 3 cars to Chinese customers at the end of this year or the beginning of next year, Ma said.