Tesla Q2 Deliveries Hit By China Lockdowns, Yet June Production Highest On Record: Worst May Be Behind

Zinger Key Points
  • Tesla reported 18% sequential drop in second-quarter deliveries
  • Model S/X deliveries improved from the previous quarter
  • June 2022 was the highest vehicle production month in Tesla’s history

Tesla, Inc. TSLA reported second-quarter deliveries that declined sequentially, in line with expectations, as COVID lockdowns in China impacted performance. On a positive note, the company reported an increase in Model S/X deliveries and also disclosed record production for June, signaling things could move northward from this point.

What Happened: Tesla reported deliveries of 254,695 vehicles in the second quarter, the company said in a statement on Saturday. On a year-over-year basis, second-quarter deliveries were up 26.5%. This represents about an 18% drop from the 310,048 vehicles delivered in the first quarter.

Tesla's second quarter was marred by supply-chain challenges and factory shutdowns following the COVID-19 lockdowns in China. The Giga Shanghai plant was shut for about three weeks in April before beginning to ramp up gradually.

Ahead of the report, Wedbush analyst Daniel Ives said he expects that 70,000 units got wiped out of the quarter due to the China shutdowns. The analyst modeled deliveries of 250,000 units for the quarter, and added that anything above 260,000 units will be viewed positively by the Street.

Model-wise, Tesla delivered 16,162 Model S/X vehicles, up about 9.8% from the March quarter. Meanwhile, Model 3/Y deliveries came in at 238,533 units, down from 295,324 units in the first quarter but higher than the 199,360 vehicles sold in the year-ago quarter.

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Record June Production: Production totaled 258,580 vehicles in the second quarter. This compares to the year-ago's 206,421 units and the previous quarter's 305,407 units.

The company noted that June was the highest vehicle production month in its history.

What's Next: With the deliveries report now behind, the next big catalyst for Tesla is its first-quarter earnings report that is due on July 20, after the market close. Analysts, on average, estimate the company to report second-quarter earnings per share of $1.98, up from $1.45 in the year-ago period. Revenue is expected to rise over 46% to $17.48 billion.

Ives said the Street will be focused on the trajectory for the second half and the overall demand picture.

"We note that even with China essentially shut down for 2 months (April, May) from a demand/production perspective that Tesla is still on pace to increase deliveries roughly 50% year over year in 2022," the analyst said.

Tesla closed Friday's session up 1.24% at $681.79, according to Benzinga Pro data.

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