Tesla’s Q2 Delivery Victory Puts Old School Automakers on Notice

Tesla investors are celebrating a major achievement by Elon Musk and Co. The electric vehicle maker cruised past expectations for Q2 deliveries, despite its Fremont assembly plant being shut down for almost half the quarter due to COVID-19. 

Putting the numbers into context: For the June quarter, Tesla reported deliveries of 90,650, down 5% year-over-year, compared to GM down 34%, Toyota down 35%, and Fiat Chrysler down 39%. Models 3/Y deliveries were 80,050. Factset estimates for total deliveries were for 72,000. 

Adapt or Die: With an 80% share, Tesla is dominating the U.S. electric vehicle market. Loup Ventures Managing Partner Gene Munster doesn’t see market share being threatened by other automakers in the next two years, despite the introduction of new EVs to market. Munster notes that there are currently 16 EVs available for purchase in the U.S., with 12 additional models coming to market by the end of the year. Munster emphasizes that many of these are not mainstream options due to their expensive price points and limited range.

• “We believe car companies that have been around for 50+ years will eventually (10 years from now) be forced to restructure or go out of business.”

Quieting the doubters: Two common concerns about Tesla have been cash burn and the ability to produce vehicles at scale. Munster says these uncertainties have been largely diminished.

• “Based on the just reported June quarter delivery numbers, we expect the company to report better than expected earnings, potentially near a profit despite the shutdown, and favorable details on continued profitability trends driven by the Shanghai factory and Model Y.”