Tesla beats expectations on car deliveries - is now the time to buy?

Tesla has dispatched some welcome news for investors as well as more cars to customers, with the electric car-maker delivering 443,956 vehicles in the three months to the end of June, up more than 14% on the previous quarter.

The rise comes after Tesla, run by Elon Musk, said in April that it is cutting 10% of its global workforce in a bid to cut costs and improve productivity on its electric car range.

In a leaked memo to staff, Musk wrote that Tesla had grown rapidly in recent years and as a consequence there had been a doubling up of certain roles and job functions.

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Referring to the job cuts, Musk, who recently secured shareholder support for a record-breaking $50 billion pay package, wrote: “There is nothing I hate more, but it must be done. This will enable us to be lean, innovative and hungry for the next growth phase cycle.”

Matt Britzman, an equity analyst at Hargreaves Lansdown, says: “It was only a few weeks ago that investors were contemplating what life might look like without Elon Musk at the helm. Fast forward and not only has Elon secured his multi-billion-dollar pay package but Tesla has just delivered its first positive surprise of the year in its auto division. Second-quarter deliveries were ahead of expectations and markets rewarded shares with a double-digit jump.”

However, although car deliveries were up compared to the previous quarter and far higher than analyst expectations, the figure was down nearly 5% on the same period in 2023.

Britzman says: “This isn’t the time to claim victory over a weak EV market. Tesla would need a mammoth second half to match last year’s volumes, which is probably unlikely.”

Danni Hewson, head of financial analysis at AJ Bell, adds: “Tesla is no longer in the driving seat when it comes to an EV market deluged with cheap Chinese alternatives.”

Should you invest in Tesla?

Tesla is currently navigating a tough spot – there is no denying that but the latest delivery figures are helpful. Investors will be keeping a close eye on the company as it releases its financial results in upcoming quarters. Further production and delivery numbers will be in focus too. 

Investors will also be keeping their ear to the ground for any further details on the new, more affordable line Musk is planning for early 2025. Many will be hoping this could help boost the company’s share price. 

What’s more, interest rates have now peaked and experts are expecting rate cuts to start soon. The hope is that this will give the economy a boost. Luxury goods companies like Tesla will be hoping this translates into greater demand and more sales. 

That said, the economic outlook is still far from certain and Tesla’s battle for market share rages on. Only time will tell whether Musk’s plans for a new fleet of vehicles are enough to counteract these challenges.

What’s more, other areas of the company’s product range continue to suffer disappointment. The company’s new cyber-truck continues to face delays and Tesla recently told employees who work on the model that the length of their shifts would be cut.

There is a fair amount of scepticism in the market about Musk’s push to develop an autonomous robotaxi service too – not least because of regulatory and safety concerns. With these factors in mind, investors will still be exercising a healthy dose of caution as they move ahead.