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Tesla Inc.’s estimated electric vehicle deliveries. Q1 suggest that boss Elon Musk’s bet on growth in China and Europe is starting to pay off.
The results marked a strong start to a year in which Musk, the company’s chief executive officer, is counting on global operations to scale up production and sales. Tesla, based in Palo Alto, California delivered 184,800 cars in the first three months of the year, surpassing the average estimate of 169,850 in a Bloomberg analyst survey and surpassing the fourth-quarter figure by about 4,000 cars.
The district was “a huge home run in the eyes of the bulls,” Wedbush’s Dan Ives wrote in a research note on Friday. “We believe China and Europe have been particularly robust this quarter, as Musk & Co. now exceeds 850,000 on its trajectory for the year, well above whisper expectations.”
Musk is penetrating China – already the world’s largest automotive market, including for EVs – to gain a foothold amid competition from local electric vehicle startups and Volkswagen AG. Car sales are expected to soar in the country this year for the first time since 2017, and in March Prime Minister Li Keqiang told the National People’s Congress that the government will help increase the number of charging points for electric vehicles and battery changing.
Tesla’s volume stands out from most other automakers, showing declines primarily due in part to limitations on the electronic chip, Jefferies analysts said in a research note. “Stocks should respond well to first quarter delivery data.”
After a remarkable run in 2020 with the stock price rising more than 700%, Tesla’s stock fell about 6% this year through April 1. Friday was a market party in the US.
“It’s been a brutal sell-off for Tesla and EVs, but we think it will now be in the rearview mirror,” wrote Ives, maintaining a “neutral” rating on the stock.
‘Strong reception’
Tesla recently released the Model S sedan and the X, an SUV. No Model S and X vehicles were made in the quarter and a total of only 2,000 were delivered.
“We are encouraged by the strong reception of Model Y in China and are making rapid progress with full production capacity,” Tesla said in a statement. The new Model S and Model X have also been “exceptionally well received,” the company said, adding that it is still in the early stages of production.
Tesla currently makes the Model S and X only at the Fremont, California plant, and the smaller Model 3 and Y both there and at the Shanghai plant. It plans to build two more factories, one in this year Texas and one more near Berlin. The company does not divide sales by geographic location, but the US and China are the largest markets and almost all sales were of the Model 3 and Y.
With temporary production at the Fremont plant When Tesla closed in February due to parts supply issues, Tesla’s higher margin plant in Shanghai will account for a larger share of the volume in the quarter, which should support profitability, Jefferies said in the note.
Chief Financial Officer Zachary Kirkhorn warned in January that production would be low due to the transition to the updated products, while the global semiconductor shortage and port delays were also expected to weigh on the quarter.
Tesla said the number of deliveries should be considered somewhat conservative and the final figures can vary by as much as 0.5% or more.
The quarterly delivery figure is widely seen as a barometer of the demand for both Tesla’s vehicles and consumer interest in electric vehicles around the world, as older automakers roll out their own electric cars.