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Investor Alert

July 1, 2021, 10:32 a.m. EDT

Tesla is expected to deliver more than 200,000 vehicles in the second quarter

Claudia Assis

Tesla Inc. is readying a sales update this week amid ongoing concern about its sales in China, where the Silicon Valley electric-car maker already faces stiff competition from domestic EV makers.

Analysts polled by FactSet expect Tesla (NAS:TSLA) to report the sale of 207,000 vehicles in the second quarter, including 114,000 Model 3 sedans and 78,000 Model Y compact SUVs, with the remainder roughly split between Model S luxury sedan and Model X luxury SUV vehicles.

The auto maker is likely to report the quarterly sales and production on Friday. The numbers would compare with the delivery of 184,800 vehicles in the first quarter, which Tesla then pinned in part on “the strong reception” of the Model Y in China. The company delivered 91,000 vehicles in the second quarter of 2020.

Since then, however, Tesla has faced some animosity in China, and a recall earlier this week stoked more worries, with one analyst calling it a “black eye moment” for Tesla.

Tesla has faced backlash in China in recent months over how it handled consumer concerns about the safety and quality of its cars, and also has had to grapple with more competition from Chinese EV makers such as Nio Inc. (NYS:NIO)

Nio early Thursday said it delivered nearly 22,000 vehicles in the second quarter, up 112% from the year-ago quarter and a record for the company.

Joseph Spak with RBC said in a recent note he expects Tesla to have sold 195,000 vehicles in the quarter, and that consensus numbers look “a little high.”

And while typically the deliveries, Tesla’s proxy for sales, get the most attention, Spak said that the production numbers will get a spotlight amid parts and chips shortages and Tesla likely had to draw down on some inventory in the quarter.

Updates on how the shortages continue to affect Tesla are likely to be the focus for the second-quarter earnings report later in the summer, he said.

“We also believe there will be cont’d investor focus on pace of China demand. Our view is demand improved sequentially during quarter,” but the recent recall of about 300,000 Model 3 and Model Y vehicles there for an issue with assisted driving “could negatively impact perception,” Spak said.

Chris McNally with ISI Evercore said in a note Wednesday he’s expecting the car maker to report deliveries around 211,000 vehicles. Their estimate may seen “aggressive,” but “it ultimately will come down to the unknowable quarter-end push” given the chips and parts shortages.

Related: U.S. falls further behind China and Europe in making electric vehicles

Investors will focus on company comments about demand in China, updates about the company’s autonomous driving push and the factories going up in Berlin, Germany, and Austin, and the planned “AI Day.”

Chief Executive Elon Musk last week tweeted that he was “looking at holding” a day dedicated to showcasing the electric-car maker’s “progress” in its artificial-intelligence systems.

Musk left the date open, saying only the event would take place “in about a month or so” and that its main purpose would be recruiting.

Tesla earlier this month hosted an event to showcase its Model S Plaid trim, the top-of-the-line option for the luxury sedan, and in September held an event to highlight battery technology.

Tesla shares have lost 3% so far this year, contrasting with gains of around 14% for the S&P 500 index. (S&P:SPX) For the past 12 months, however, the stock holds to gains of more than 200%, compared with gains of about 39% for the index.

Link to MarketWatch's Slice.