Tesla, Rivian results signal EV interest continues to grow, analysts say

Tesla and Rivian weren’t supposed to sell this many vehicles last quarter.

Tesla reported that it delivered about 466,000 cars from April to June in a sales update released Sunday, exceeding Wall Street analysts’ expectations of 447,000. Electric-truck maker Rivian delivered 12,640 vehicles during the same period, according to a Monday sales update, beating analysts’ expectations by more than 10 percent. The two companies saw their stock prices jump 6.9 percent and 17 percent respectively Monday.

The growing demand for electric vehicles underscores an industry-wide shift away from gas-powered cars, analysts said. “Consumers are not shying away from electric vehicles … in fact, it’s quite the opposite,” said Wedbush senior analyst Dan Ives.

Tesla’s blockbuster results show roughly an 83 percent increase from a year earlier, Ives said. “We’re seeing a green tidal wave of demand playing out,” he said.

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Tesla sales boomed in 2020 and 2021 as consumers, flush with savings and enabled by low interest rates that made it easier to buy autos on payment plans, bought high-priced electric cars faster than the company could produce them. The company’s stock price rose tenfold over that period.

It was against that backdrop that Rivian, seeing a niche for itself in battery-powered pickup trucks, went public in November 2021 with a massive stock offering that saw the company valued at nearly $100 billion on its first day of trading.

Both companies met significant challenges the following year, however, as a shortage of critical components such as battery parts fed into an array of supply chain problems. Production challenges became so bad at Rivian that some analysts began to wonder about its long-term viability, said Gene Munster, managing partner at Deepwater Asset Management. At one point, Rivian’s stock price had fallen 90 percent, and even with Monday’s surge, it remains down more than 80 percent from its first-day peak.

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At the same time, higher interest rates made it harder for potential buyers to buy vehicles whose prices can run into the high five figures or more.

Tesla appears to have counteracted that pressure by cutting prices multiple times this year on its two cheapest models, the Model Y and Model 3. A new Tesla Model Y now costs as little as $47,490, according to Kelley Blue Book, roughly in line with the industry-wide average for a new car. Monday’s deliveries data suggest those price cuts “are working in a big way,” Munster said.

“You can get a Tesla for right around $50,000, and that’s a really big deal,” he said.

The company is now producing more cars than it sells, however, which suggests Tesla isn’t as efficient as it could be, Munster said. Tesla’s inventory rose as it built 479,700 vehicles in the second quarter, exceeding deliveries by about 13,000.

The difference between production and deliveries is not big enough to cause a panic, Munster said, but it could become a problem if that gap grows. “It’s a sign that they’re not utilizing their factories well,” Munster said.

Electric vehicles appeal to conservative buyers sick of gas guzzlers

The growth of pure-play electric vehicle manufacturers could presage a much bigger industry transformation, as traditional automakers reprise well-known brands as all-electric models. Dodge recently retired its gas-powered Charger and Challenger muscle cars in favor of battery-powered cars that imitate their predecessors’ classic roar, for example, while Ford offers an all-electric F-150 pickup.

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Earnings results from Tesla and Rivian “are just a drumroll to much broader electric vehicle adoption, with [General Motors] and others diving in with their own models,” Ives said.

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