Tesla Shares Soar as Price Reductions Drive Surge in Car Deliveries
Shares of Tesla experienced a significant surge on Monday morning following the announcement of a record number of car deliveries in the second quarter. The achievement validates CEO Elon Musk's strategy of stimulating demand by aggressively discounting prices. Tesla reported delivering 466,140 vehicles in the second quarter, a 10% increase from the previous quarter and an impressive 83% increase compared to the same period last year. The deliveries comprised 446,915 Model 3/Y vehicles and 19,225 Model S/X vehicles. Analysts pointed out that Tesla's price reductions have proven to be highly effective, with Gene Munster, managing partner at Deepwater Asset Management, highlighting the notable growth in deliveries this quarter compared to previous quarters. The gap between vehicles produced and deliveries also narrowed, indicating improved operational efficiency.
Tesla's stock responded positively to the news, with an increase of nearly 7% on Monday, reaching around $276 per share—more than double its price at the beginning of 2023. Several analysts raised their price targets on Tesla stock, suggesting that the company's annual delivery target of 1.8 million vehicles could be conservative, as it has already achieved around half of that goal in the first half of the year. Despite the positive outlook, there are concerns about margins and profitability. Analysts predict a decline in gross margins from the first quarter to the second quarter, expecting Tesla to further lower prices to meet volume targets, potentially impacting margins.
A few years back, Hertz took a bold step by purchasing 30,000 Teslas, aiming to electrify 20% of its rental fleet.