Tesla Inc shares surged in European trading as a record quarter of deliveries alleviated the worst fears about demand for the company’s electric vehicles.
The Model 3 maker shipped 95,200 vehicles to customers in the three months that ended last month, exceeding the previous best mark set in the last quarter of last year.
Tesla’s delivery count exceeded all but one analyst’s estimate in a Bloomberg News survey.
Tesla early yesterday shares soared as much as 7.7 percent on Tradegate. The stock was down 33 percent for the year through the end of regular trading in New York on Tuesday, in part due to demand concerns that chief executive Elon Musk has repeatedly disputed.
While the results go a long way toward contradicting Tesla’s doubters, it remains to be seen whether this level of demand is sustainable — or profitable.
The US$3,750 US federal tax credit buyers were eligible for was cut by half beginning on Monday, and deliveries tailed off the last time the incentive shrank.
Musk has also said that the company would post a loss for the quarter, then report positive earnings in the second half.
Tesla also left out of its statement any mention of its full-year forecast for 360,000 to 400,000 deliveries, a projection it reaffirmed in its release a quarter ago.
Tesla representatives did not respond when asked whether the company is sticking with its guidance.
It would have to average more than 100,000 units per quarter in the second half to reach the low end of the range.
“The stock and future of Tesla all reside on the sustainable demand going forward and elusive profitability,” Wedbush Securities analyst Dan Ives wrote in a report.
Musk urged employees to “go all out” in the final days of Tesla’s first full quarter in which Model 3s made their way to buyers in Europe and China.
Overseas demand contributed to deliveries of the sedan jumping to 77,550 units, more than all the vehicles Tesla handed over in the first quarter.
One reason Wall Street remains concerned about Tesla’s profitability is shrinking demand for the higher-margin Model S and Model X. Combined deliveries dropped to 17,650 in the quarter, down more than 20 percent from a year ago.
Investors are concerned that the cheaper Model 3 is cannibalizing the company’s more lucrative vehicles.
With the US federal tax credit shrinking this year and ending next year, Tesla might also have to lean more on overseas markets to buoy sales. That would test the firm’s ability to keep shipping and logistics costs contained.
Tesla is building a vehicle and battery assembly plant near Shanghai, and Musk has said that he hopes to pick a location for a similar factory in Europe by the end of the year.
“We made significant progress streamlining our global logistics and delivery operations at higher volumes, enabling cost efficiencies and improvements to our working capital position,” Tesla said in its statement.
Tesla also said that orders exceeded deliveries during the quarter and it expects to boost production and hand over more vehicles in the next three months.
The number of vehicles in transit at the end of last month was more than 7,400.
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