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Electric vehicle deliveries that beat Tesla Inc. estimates in the first quarter suggest that boss Elon Musk’s bid for growth in China and Europe is beginning to pay off.
The results marked a strong start to a year in which Musk, the company’s chief executive, has global operations to help increase production and sales. Tesla based in Palo Alto, California delivered 184,800 cars worldwide in the first three months of the year, topping the average estimate of 169,850 in a Bloomberg analyst survey and topping the fourth-quarter figure by roughly 4,000 vehicles.
The quarter was “a massive home run in the eyes of the bulls,” Wedbush’s Dan Ives wrote in a research note on Friday. “We believe China and Europe were particularly robust this quarter as the track record now places Musk & Co. to exceed 850k for the year, which is well ahead of whispered expectations.”
Musk is entering China, which is already the world’s largest auto market, including for electric vehicles, to take hold amid competition from local electric vehicle startups as well as Volkswagen AG. Auto sales are expected to increase in the nation this year for the first time since 2017, and in March, Prime Minister Li Keqiang told the National People’s Congress that the government will help. increase the number of electric vehicle charging stations and battery exchange facilities.
Tesla’s volume sets itself apart from most other automakers, which are primarily showing declines in part due to the limitations of electronic chips, Jefferies analysts said in a research note. “Stocks should respond well to Q1 delivery data.”
After a remarkable run in 2020 in which its share price rose by more than 700%, Tesla shares fell about 6% this year through April 1. Friday was a market holiday in the US.
“It has been a brutal sell-off for Tesla and EVs, but we think it will now be in the rearview mirror,” wrote Ives, who maintained a “neutral” rating on the stock.
Tesla recently updated the Model S sedan and the X, an SUV. Without Model S and X Vehicles were manufactured in the quarter and only 2,000 were delivered in total.
“We are encouraged by the strong reception of the Model Y in China and we are progressing rapidly towards full production capacity,” Tesla said in a statement. The new Model S and Model X they have also been “exceptionally well received,” the company said, adding that it is in the early stages of production.
Tesla currently manufactures the Model S and X only at its Fremont, California factory, and the smaller Model 3 and Y both there and at its Shanghai plant. It plans to build two more factories this year, one in Texas and other near Berlin. The company does not break down sales by geography, but the US and China are its largest markets and nearly all sales were of the Model 3 and Y.
With production at the Fremont factory temporarily Closing in February on spare parts supply issues, Tesla’s higher-margin Shanghai plant will account for a larger share of volume in the quarter, which should support profitability, Jefferies said in the note.
CFO Zachary Kirkhorn warned in January that production would be low due to the transition to refurbished products, while global semiconductor shortages and delays at ports were also expected to weigh on the quarter.
Tesla said its delivery count should be considered a bit conservative and that the final figures could vary by as much as 0.5% or more.
The quarterly delivery figure is widely seen as a barometer of demand for both Tesla vehicles and consumer interest in electric vehicles around the world as legacy automakers launch their own electric cars.