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The delivery of electric vehicles in the first quarter of Tesla Inc. suggests that boss Elon Musk is beginning to bear fruit on the bet on growth in China and Europe.
The results were a strong start to a year in which Musk, the company’s CEO, is counting on international operations to increase production and sales. Palo Alto, Tesla, California delivered 184,800 cars worldwide in the first three months of the year, yielding the average estimate of 169,850 in a Bloomberg survey among analysts and beating the fourth quarter by about 4,000 vehicles.
The quarter was “a massive home run in the eyes of the bulls,” Dan Ives wrote in a research note on Wedbush Friday. “We believe China and Europe were particularly strong this quarter, as Musk & Co. will now exceed more than 850km for the year, which is much better than whisper expectations.”
Musk is driving China – already the world’s largest car market, also for motor vehicles – to gain a foothold amid competition from local electric vehicle start-ups as well as Volkswagen AG. Sales are expected to rise in the country for the first time since 2017, and in March Prime Minister Li Keqiang told the National People’s Congress that the government would help increases the number of EV charging stations and battery exchange facilities.
Analysts at Jefferies say that the volume of Tesla differs from most other car manufacturers, which is declining in part due to electronic chips. “Shares should respond well to Q1 delivery data.”
After a remarkable run in 2020 that raised its share price by more than 700%, Tesla’s shares fell by about 6% until April 1 this year. Friday was a market holiday in the USA
“It was a cruel sell-out for Tesla and EVs, but we believe it will now be in the rearview mirror,” writes Ives, who maintains a “neutral” rating of the shares.
‘Strong reception’
Tesla has the Model S sedan and the X, an SUV. No Model S and X vehicles were manufactured during the quarter, and only 2,000 were delivered in total.
“We are encouraged by the strong reception of the Model Y in China and are rapidly advancing to full production capacity,” Tesla said in a statement. The new Model S and Model X the company was also ‘exceptionally well received’, the company said, adding that it was in the early stages of production.
Tesla is currently making the Model S and X only at his factory in Fremont, California, and the smaller Model 3 and Y as well there as in his factory in Shanghai. It is planned to build two more factories this year, one in Texas and another near Berlin. The company does not break out the geographic sales, but the US and China are the biggest markets and almost all the sales were of the Model 3 and Y.
With temporary production at the Fremont factory Jefferies closed a larger portion of the volume at Tesla’s higher-margin plant in Shanghai in February over parts issues.
Zachary Kirkhorn, chief financial officer, warned in January that production would be low due to the transition to refurbished products, while the global shortage of semiconductors and delays in ports were also expected to weigh in the quarter.
Tesla said its delivery should be considered slightly conservative and that final numbers could vary by as much as 0.5% or more.
The quarterly delivery rate is widely seen as a barometer of demand for both Tesla’s vehicles and the interest of consumers in electric vehicles worldwide, as old-fashioned car manufacturers roll out their own electric cars.