Tesla’s world’s most important electric car plant was closed for about seven weeks in the second quarter of this year due to a new crown outbreak, but its new Shanghai plant may have saved the situation and is expected to help it avoid quarterly losses, Hong Kong media reported. The manufacturer may have delivered more than 83,000 electric cars last quarter, according to analyst estimates compiled by Bloomberg.
Some analysts even expect Tesla to deliver more than 87,000 vehicles in the quarter, or more than 88,000 in the first quarter of this year, compared with the same period last year.
Just a few months ago, expectations for the company were much lower, when shares of Tesla and its auto industry peers plunged after they closed factories and showrooms in the wake of the outbreak. However, the shares of other carmakers have slowly recovered, and Tesla’s share price has climbed even further, reaching a record $1,135 a share in the mid-day session on Wednesday.
Tesla’s market value has soared to about $2017 billion, surpassing Exxon Mobil Corp. and auto industry leader Toyota. The stock closed Wednesday at $1,119.63, up 3.69 percent.
The new plant in Shanghai, which began delivering electric cars to public customers in January, has given tesla a big boost. The automaker also began production of model Y crossovers in March and hastily reopened its plant in Fremont, California, in May so it can continue to meet high demand for orders. Elon Musk, Tesla’s chief executive, expects the model to become the company’s best-selling model.
“The lesson is that Tesla’s share price tends to perform well when new products are introduced,” Jeffrey Osborne, an analyst at investment bank Cowen, said in a research note on Tuesday. Model Y and the company’s cars in China are now boosting production capacity. He gave the stock a “sell” rating.
Earlier this week, Musk told Tesla employees that the company may be able to avoid losses in the second quarter.
“Breaking even balance looks urgent,” he wrote in an email to employees. Every car that everyone makes and delivers has a big impact on the company. Please do your best to ensure victory!”
Musk often issues internal memos at the end of the quarter to boost morale, rush to performance and send positive signals to investors, but at times he’s over-optimistic. In the quarter ended Sept. last year, Tesla reported a record 97,000 deliveries, but less than the 100,000 he mentioned in his email to employees.
But even skeptics in analyst circles are bullish on the company’s performance for the quarter.
“With strong factory production in China and better-than-expected production at the Fremont plant, we believe Tesla’s deliveries will exceed what appears to be a lower expectation.” Brian Johnson, an analyst at Barclays, wrote in a research note. He also gave Tesla shares a “sell” rating.
He estimates that if electric vehicles are delivered to 85,000 vehicles, Tesla is on track to post quarterly earnings, making its stock eligible for inclusion in the Standard and Poor’s 500 index. Mr Johnson still believes the company’s share price is “fundamentally overvalued” but he thinks it is likely to continue to rise in the coming weeks.
“We urge our bearish friends(perhaps to think that Tesla’s share price of more than $1,000 is overvalued) to stay off the top,” Johnson wrote in the report. “