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Strong Delivery Count to Steer Tesla's (TSLA) Q2 Earnings

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Tesla (TSLA - Free Report) is set to release second-quarter 2021 results on Jul 26, after the closing bell. The electric vehicle (EV) manufacturer’s upcoming results will likely reflect the favorable impact of rising Model 3/Y deliveries, which form a major chunk of the automaker’s overall deliveries.

(Also read: Is a Beat in the Offing for Tesla This Earnings Season?)

Q1 Highlights

In the last reported quarter, Tesla posted earnings of 93 cents per share, topping the Zacks Consensus Estimate of 79 cents. Moreover, the red-hot EV maker posted profit for the seventh straight quarter, with the metric skyrocketing 272% on a year-over-year basis. Total automotive revenues surged 75% year over year to $9,002 million. Tesla had cash and cash equivalents of $17,141 million as of Mar 31, 2021 compared with $19,384 million on Dec 31, 2020. The firm generated free cash flow of $293 million during the first quarter.

During the March-end quarter, Tesla reported production and delivery of 180,338 and 184,800 vehicles, respectively, way higher than the 102,672 units produced and 88,400 units delivered in the corresponding quarter of 2020. The company reported Model 3/Y production and deliveries of 180,338 and 182,780 vehicles, marking a year-over-year jump of 107% and 140%, respectively. Meanwhile, the company did not produce any Model S/X during the first quarter. Nonetheless, it delivered 2,020 units of the same, marking an 83% slump year over year.

Production & Deliveries in Q2

With the Model 3 sedan being its flagship vehicle, Tesla has established itself as a leader in the electric vehicle (EV) segment. Solid performance and impressive design of its products are anticipated to have ramped up sales volumes during the quarter under review. Being the first mass-market electric car in North America and Europe, Model 3 is one of the best-selling vehicles. The car’s market-leading safety, performance and impressive specs have made it a huge success. Also, elevated production and deliveries of Model Y vehicles are likely to have buoyed the automaker’s earnings during the quarter in discussion.

Tesla reported stellar second-quarter 2021 production and deliveries, thanks to soaring popularity of green vehicles, rising preference for personal mobility, easier credit conditions, and sustained economic recovery buoyed by the accelerated nationwide vaccination drive, fiscal stimulus and low interest rates.

The EV behemoth registered production and deliveries of 206,421 and 201,250 vehicles, respectively, in the June-end period, way higher than the 82,272 units produced and 90,650 units delivered in the corresponding quarter of 2020. The delivery count marks a 9% and 122% jump on a sequential and yearly basis, respectively.

During the second quarter, Tesla battled semiconductor chip shortage and price increases that plagued automakers globally. Nonetheless, defying all odds posted by the supply-chain crisis, Tesla was able to boost Model 3/Y production and deliveries. In fact, the auto giant ended the quarter as the first three-month period in which it delivered more than 200,000 vehicles, breaking the delivery record set in the previous quarter.

For the quarter in discussion, the Model 3/Y registered production of 204,081 vehicles, while 199,361 vehicles were delivered, reflecting a massive increase from the production of 75,946 units and delivery of 80,050 units of Model 3/Y during the year-ago quarter.

Tesla has been benefiting from high sales in its second biggest market — China. In fact, Tesla has become a household brand name in China owing to the soaring popularity of its domestically-produced Model 3 and Model Y vehicles.

Overall Earnings & Revenue Projections for Q2

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at 90 cents, indicating an increase from the 44 cents posted in the prior-year quarter. The Zacks Consensus Estimate of more than $11 billion for sales indicates an 86.7% surge on a year-over-year basis.

All in all, robust Model 3/Y demand and solid performance of the energy and storage business are likely to have aided Tesla’s performance during the quarter to be reported.

Tesla — which shares space with auto biggies including General Motors (GM - Free Report) , Ford (F - Free Report) and Toyota (TM - Free Report) — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.