Tesla's Best Quarter in Two Years: What Investors Need to Know

Tesla just reported its strongest second quarter ever, delivering 480,126 vehicles. That's a 25% jump from last year and a 34% increase from the first quarter of 2024. The company had only expected around 406,000 deliveries, so this was a big beat.

Model 3 and Model Y led the way, accounting for over 467,000 deliveries. This is the first time since 2023 that Tesla has reported year-over-year delivery growth, a key milestone after two sluggish years.

Tesla also deployed 13.5 gigawatt-hours (GWh) of energy storage products, up from 9.6 GWh a year ago. This segment is becoming increasingly important to Tesla's long-term story.

The strong quarter comes amid challenges like backlash against CEO Elon Musk and the loss of the federal EV tax credit. Discounting helped drive sales, which raises questions about sustainability.

This quarter shows Tesla can still deliver growth, but investors need to look beyond the headline numbers. The delivery beat is positive, but it was partly fueled by discounts, which could pressure margins.

Tesla's valuation remains extremely high, with a forward P/E of nearly 180 and a trailing P/E of 374. The stock is down 12% year-to-date, yet the market cap is still nearly $1.5 trillion. Much of the future growth is already priced in.

The real bull case for Tesla lies beyond cars. Energy storage, the Supercharger network, self-driving technology, and robotics offer long-term potential. The energy storage business, in particular, is poised for explosive growth.

However, competition is intensifying. Global players like BYD and domestic rivals like Rivian are eating into Tesla's market share. EV demand in the U.S. remains muted, and Tesla's reputation risk from Elon Musk persists.