What's going on?
Shares of electric car maker Tesla jumped 5% on Wednesday after the company revealed that it delivered more cars last quarter than investors had predicted. Shocking…
What does this mean?
Tesla and its investors have a tricky relationship: the company often sets itself ambitious targets which it then misses. So investors were understandably skeptical regarding Tesla’s plans to deliver 90-100,000 vehicles in the second quarter, instead forecasting 88,000. But thanks to more overseas orders from Europe and China, as well as a vanishing tax credit that may have pumped up US purchasing, Tesla delivered 95,000 cars – its most ever in a single quarter (tweet this).
Why should I care?
The bigger picture: Some grands prix in a slowing autos market.
Car sales in the US fell 2% in the first half of 2019 and are expected to decline for the year as a whole. As economic growth slows, consumers tend to spend less on big-ticket items. General Motors and Fiat Chrysler both reported shrinking US sales for the first six months of the year late on Tuesday – although sales of Fiat’s Ram trucks picked up in June and may set the company up for a better second half. There were no such green shoots for Japanese automakers Nissan, Honda, and Toyota, however. And in the German luxury motor melee, BMW’s got the beating of Daimler: it emerged from three years in the Mercedes-Benz maker’s slipstream to outsell its rival’s SUVs last month.
For markets: Investors strap in.
Tesla’s stock rose thanks to investors’ buying. They likely expect the opposite of Tesla’s first quarter: more deliveries than forecast should translate into greater revenue and a smaller loss than thought. Tesla also claims that it’s got a backlog of orders which’ll keep sales ticking over. Any additional cash in the door – combined with the money recently raised from investors – should help Tesla avoid any crashes and weather clashes with rivals’ competing cars. Volkswagen and Jaguar are just two growing in the rear-view mirror…