The achievement by the United States based electric car maker Tesla of being able to deliver record number of electric cars in the second quarter as promised by its Chief Executive Officer Elon Musk resulted in increased confidence of investors in the company and pushed its shares higher almost 7 per cent on Wednesday. The numbers also apparently doused fears among investors about the demand for the sedans and SUVs of the company.

There have been doubts expressed by investors, analysts and experts at Wall Street about the touted demand for its cars by Tesla as well as about the capacity of the company to be able to resolve the delivery issues faced by it especially following a very dismal first quarter of the current year when its deliveries of cars dropped by a whopping 31 per cent.

“We are increasingly comfortable that they should reflect an even better in the third quarter, and probably their first hundred thousand in a quarter,” Roth Capital analyst Craig Irwin said.

Tesla beat estimates of analysts in terms of the vehicle deliveries in the second quarter with total deliveries of 95,200 vehicles. The company however did not make any comments about the time period when it would be able to achieve profitability again.

Shares of the company touched their highest in nearly two months with a gain of 6.4 per cent at $238.92. The stock had lost nearly one-third of its value so far this year till the closure of trading on Tuesday.

A fall in the orders for Tesla vehicles from within the US because of the halving of the tax credits for the company allowed by the US government and logistics issues at international ports had impacted the deliveries of the company vehicles during the first quarter. That drastic drop in deliveries raised wide spread concerns about the possible peaking of the demand for Tesla’s electric cars.

There were some analysts who were still skeptical about Tesla’s ability to deliver on its promise and maintain margins even though Musk has been striving hard to convince investors that demand remains high for Tesla cars and that the company would be able to make deliveries more efficiently.

Caution was prescribed about the ability of Tesla to remain profitable and maintain healthy margins by analysts at Needham. A similar view as also echoed by Credit Suisse analysts.

In the second quarter, 77,550 Model 3s were delivered by Tesla. This model is viewed to be the key to the growth and profitability of Tesla and its transformation into a company whose vehicles have a mass appeal and affordability. According to IBES data from Refinitiv, analysts and experts had estimated deliveries of 73,144 Model 3 vehicles.

Tesla “has a shot at being profitable this quarter on a non-GAAP (adjusted) basis, even with materially pressured automotive gross margins,” said Bernstein analyst Toni Sacconaghi.

“These are undeniably strong numbers, but given Tesla’s recent history of significant swings in performance from quarter-to-quarter we remain cautious for now,” Hargreaves Lansdown analyst Nicholas Hyett said

(Adapted from Reuters.com)

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