Tesla delivered a total of 90,650 vehicles during Q2 2020, with 10,600 units in Model S and X deliveries and 80,050 in Model 3 and Y sales. While these figures mark a decrease of 5% year-over-year, they handily exceed analyst forecasts, causing Tesla stock to leap by 8% in Thursday’s trading. The solid delivery figures come at a time when the broader car market is suffering from a downturn in demand triggered by COVID-19, with U.S. auto sales expected to fall by around 34 percent over the quarter. Moreover, Tesla’s flagship Fremont facility actually remained shut for about six weeks over Q2 due to lockdowns associated with the pandemic. So how was Tesla reacting to those figures?
Growth in China’s Market
Tesla’s Shanghai facility began production earlier this year, with a capacity of 200,000 Model 3 vehicles per annum. Production at this facility has very rapidly scaled up, with Tesla suggesting that by mid-2020 it will be manufacturing 4,000 vehicles in the factory. China’s demand has also been strong, as the country’s automobile market bounced back rapidly, and Tesla’s higher localization rates and price cuts have helped the company improve sales in the nation. Throughout the month of May alone, Tesla shipped over 11k Model 3 vehicles per China Passenger Car Association.
Promotions and Discounts
With its promotions and discounts, Tesla has also been very aggressive in stoking demand over the year. In May, the company cut prices on its vehicles, with the Model 3 seeing a $2,000 price cut, while the Model S and X saw prices drop by as much as $5,000. Separately, the company reportedly provided rewards for certain consumers purchasing Model 3 vehicles in June. The firm has also been slashing vehicle prices in China.
Full Quarter of Model Y Availability
Tesla has also potentially benefited from Q2 being the first full quarter of the Model Y crossover, launched in March. Although Model Y sales were not split by the company, Model 3 and Y combined deliveries were up by about 4k units sequentially to around 80k units. The Model Y output ramp is likely to have been faster than other new Tesla models, because the vehicle shares many components with the Model 3. Delivery lead times for the Model Y were relatively small at 4 to 8 weeks currently, compared to around 8 to 12 weeks for Model 3 suggesting that the vehicle’s supply is less of a constraint.
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Reported by Forbes.
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