Why Tesla Stock Popped Ahead of Second-Quarter Deliveries

Tesla’s quarterly delivery report may exceed reduced estimates.

Shares of Tesla (TSLA 6.12%) have been on the comeback trail recently, and that continued on the first trading day of July. Shares of the leading electric vehicle (EV) maker were higher by 5.5% as of 11:10 a.m. ET Monday morning. The stock is now up by about 18% over the past month.

Today’s jump comes just a day before Tesla is expected to report its second-quarter EV delivery data. While estimates have been trending lower, delivery reports from Chinese EV makers today have investors feeling more optimistic about what the American company will say.

The important Chinese EV market

The Chinese EV market has been crucial for Tesla, whose most productive factory is in Shanghai. Today, several Chinese EV makers reported strong June and second-quarter deliveries. That might bode well for what Tesla has to share tomorrow.

Nio, Li Auto, XPeng, and the larger BYD all showed year-over-year growth in battery-electric vehicle (BEV) sales for the quarter. The period seemed to end on a strong note, as Nio delivered a monthly record 21,209 vehicles in June. That was nearly twice what it shipped in June 2023.

Many EV observers have been closely watching the larger BYD, whose BEV volume is more in line with that of Tesla. BYD sold more than 426,000 fully electric vehicles in the second quarter, up about 21% year over year.

Tesla analysts have been lowering estimates for its second-quarter sales, with most recent projections averaging about 420,000 EVs. That would be down from about 466,000 delivered in the prior-year period. It would also be the second quarterly period where BYD outsold Tesla to be the world’s largest EV seller.

With China’s EV market seemingly recovering, it could result in Tesla beating estimates. Even after that data is released, though, shareholders will want to continue to pay attention to what Tesla says about profit margin when it releases its full second-quarter financial report. If the sales in China are coming from reduced prices, the boost in it shares might be short-lived.

Howard Smith has positions in BYD Company, Nio, Tesla, and XPeng. The Motley Fool has positions in and recommends BYD Company, Nio, and Tesla. The Motley Fool has a disclosure policy.

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