Tesla and Rivian Automotive, two Electrtic Vehicle rivals, witnessed an impressive surge in stock prices on Monday after better-than-expected sales in the second quarter of 2023.
The rising share prices increased Tesla’s market value by $57 billion. Tesla, the world’s most-valuable carmaker, is now valued at $887 billion.
At $277, the company share prices have already doubled this year, surpassing expectations of market analysts. However, brokerages have raised concerns about Musk’s strategy, arguing that aggressive discounting could potentially add to margin pressure.
Tesla could improve its sales figure in the second quarter following Elon Musk’s strategy to boost volumes by giving discounts amid the weakening economy and rising competition in the EV market.
Tesla delivered 466,140 vehicles in the April to June period, an increase of 10 percent from the previous quarter and a 83 percent increase compared to previous year. This suggests that Tesla’s annual delivery target of 1.8 million vehicles would now be too conservative as the company has already fulfilled half of its delivery goal in the first six months of 2023.
“Tesla’s price cuts are working in a big way. The average growth of deliveries over the previous seven quarters was 50%. This (quarter) marks a measurable step up in growth,” Reuters quoted Gene Munster, managing partner at investment firm Deepwater Asset Management, as saying.
Meanwhile, stocks of California-based Rivian Automotive surged 17.4 percent in a holiday-shortened session, reaching its highest value in four months.
Although the company struggled in the first quarter due to supply chain shortage and stiff competition from market leader Tesla, it managed to surpass market estimates for second quarter deliveries.
The EV start-up delivered 12,640 vehicles, primarily pickup trucks, in the second quarter (April-June), beating market estimates of 11,000 vehicles.
Some analysts believe that Rivian’s focus on developing its own drive unit to lower costs and reduce dependency on suppliers has helped the company stand out among other EV makers.
“All auto makers had supply chain issues in 2021 and 2022, but Rivian appears to be turning a corner and their 50k production goal for this year looks highly achievable post the Q2 number,” Needham analyst Chris Pierce told Reuters.
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