Tesla Gears Up for Battle With Gasoline Cars

livemint.com:

Head-to-head competition with Tesla is a bullet that old-school automakers are still largely dodging in the U.S., but it is only a matter of time before they get hit. The electric-vehicle pioneer said Sunday that it delivered 466,140 Teslas in the second quarter, a record and around 24,000 more than analysts polled by FactSet forecast. The stock was up about 5% premarket as investors saw a sign that Chief Executive Elon Musk’s price cuts earlier this year are bearing fruit.

Peel the fruit and it appears a bit less sweet: Production outpaced deliveries for the fifth consecutive quarter, meaning that Tesla’s inventories are still increasing despite better sales. This gives the company a reason to continue finding ways to stimulate additional demand, such as a June offer that any Model 3 ordered before the end of the quarter would come with three months of free charging. The result is that Tesla’s margins, which it will report later this month for the second quarter, could continue to decline in the second half of the year.

Tesla became highly profitable during the pandemic, but this year Musk has pivoted back to the company’s original mission of growing as fast as possible, even if it means earnings fall this year. That isn’t the kind of thing investors usually celebrate, but Tesla’s stock has more than doubled year to date. The company’s shareholders have a record of paying less attention to near-term profit than most, and this year’s performance also reflects a rebound after a dismal run, as well as a wider stock-market preference for big growth stocks.