Tesla (TSLA) Q2 2021 Earnings Preview: Rapid Growth in Revenue, EPS, and Vehicle Deliveries

Focus on Tesla's Vehicle Delivery Surge

Key Highlights

• Analysts project adjusted EPS of $0.99, more than double the $0.44 reported in Q2 2020.
• Vehicle deliveries hit 201,250 in Q2, marking a 122% year-over-year increase—the fastest growth since Q2 2019.
• Revenue expected to climb at the quickest pace since Q4 2018, fueled by robust vehicle sales.

Tesla Inc. (TSLA) continues to accelerate its growth trajectory, having achieved its first full year of profitability in 2020. Over the last three quarters, Tesla has demonstrated remarkable gains in earnings, revenue, and vehicle deliveries, solidifying its status as a global leader in electric vehicles with a market capitalization exceeding $631 billion as of July 22, 2021.

Investors eagerly anticipate Tesla’s Q2 2021 earnings report on July 26, expecting continued momentum. Analysts forecast a significant rise in adjusted earnings per share alongside accelerating revenue growth, signaling strong operational performance.

Vehicle delivery figures, already disclosed earlier this month, reveal Tesla’s expanding footprint with a 122% increase compared to the same quarter last year, underscoring the company’s production and sales strength.

Despite Tesla’s successes, CEO Elon Musk faces legal challenges related to the 2016 SolarCity acquisition. While Tesla itself bears no financial risk, Musk may face personal liabilities. The lawsuit alleges the acquisition was intended to rescue SolarCity, but Musk maintains it was a strategic move to diversify Tesla’s business beyond automotive manufacturing.

Tesla’s stock has outperformed the broader market significantly over the past year, delivering a 108.9% total return compared to the S&P 500’s 33.8%. The stock surged following the 2020 U.S. presidential election and COVID-19 vaccine developments but has experienced some volatility since its peak in January 2021.

Tesla's Earnings Performance Overview

Following a strong Q1 2021 earnings report, Tesla’s stock experienced a decline despite surpassing adjusted EPS estimates by 306.6%, the fastest quarterly growth in over four years. Revenue climbed 73.6% year-over-year, marking the most rapid increase since Q4 2018. These gains came despite supply chain disruptions, including production halts at the Fremont factory due to parts shortages and a global semiconductor deficit impacting the automotive industry.

In Q4 2020, Tesla posted mixed results, narrowly missing adjusted EPS forecasts but exceeding revenue expectations. Adjusted EPS grew 94.6%, a deceleration from Q3’s 105.2%, while revenue increased 45.5%, the fastest pace since Q2 2019. The quarter capped Tesla’s inaugural full year of profitability, supported in part by the sale of emissions credits to other automakers.

Looking ahead to Q2 2021, analysts anticipate a 126.5% rise in adjusted EPS, marking Tesla’s eighth consecutive quarter of positive adjusted earnings. Revenue is forecasted to surge 89.4%, continuing an upward trend that began in late 2020. For the full fiscal year 2021, expectations include more than doubling adjusted EPS and a 56.5% increase in revenue—the highest growth rate since 2018.

Source: Visible Alpha; Tesla.

Critical Focus: Vehicle Deliveries

Vehicle deliveries remain a key indicator of Tesla’s growth potential. The company aims to expand production significantly to sustain revenue and profit increases. In FY 2020, Tesla set a target of 50% annual growth in deliveries. However, intensifying competition, such as Volkswagen AG becoming Europe’s top electric vehicle seller last year, challenges Tesla’s market dominance.

Maintaining quality amid rapid production growth is crucial. Recently, Tesla recalled over 285,000 vehicles in China due to cruise-control system issues, highlighting potential risks to brand reputation and future demand.

Tesla’s delivery numbers have steadily increased from 103,200 vehicles in FY 2017 to 499,600 in FY 2020. Although Q2 2020 saw a slight 4.7% year-over-year decline—the first in over three years—Tesla rebounded strongly in subsequent quarters with delivery growth rates exceeding 40%. In Q2 2021, deliveries jumped 122%, supporting optimistic revenue forecasts.

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