Key Points
Don’t call it a comeback. Tesla (NASDAQ: TSLA) just posted its strongest second quarter ever. The company delivered an incredible 480,126 vehicles in that time frame, a 25% jump from last year and a 34% increase from the first quarter of this year.
Deliveries far exceeded expectations. Tesla itself only expected roughly 406,000. Model 3 and Model Y led the charge, accounting for more than 467,000 deliveries.
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One notable insight is that this is the first quarter since sales peaked in 2023 in which Tesla has reported year-over-year delivery growth.
Tesla needed this strong quarter, as it is still trying to recover from both backlash against CEO Elon Musk and the loss of the federal EV tax credit. Tesla also deployed 13.5 gigawatt-hours (GWh) of storage products, a substantial increase from 9.6 GWh in the year-ago period.
What a good quarter means for investors
One good quarter doesn’t necessarily mean the struggles for EV manufacturers are over. Tesla has endured two sluggish years, and competition has only increased. EV demand in the U.S. is also muted. Global brands such as BYD and, domestically, Rivian and legacy automakers could eat into Tesla’s market share both at home and abroad.
The strong quarter was partly driven by discounting, which suggests more quarters are needed to see whether this rebound will stick. Tesla also still bears the risk of Musk’s reputation, which is a consideration if the colorful CEO decides to split his focus further or wade into various controversies.
Image source: The White House.
The real bull case is beyond cars
In the long term, Tesla will need more than just its cars, which is why the company’s energy storage division is so crucial. Tesla is focusing on scaling energy storage deployment, its Supercharger network, self-driving capabilities, and robotics. This diversification supports the bull case that Tesla still has plenty of room to grow.
Tesla’s valuation already reflects the broader potential beyond just its automotive sector. The stock is still trading at a premium despite a 12% year-to-date price drop. The company’s forward P/E ratio is nearly 180, while the trailing P/E is more than double that at 374.
For me, the most promising part of Tesla’s narrative is its participation in the energy storage industry. This market is primed to explode over the next several years. In the first quarter of 2026, Tesla’s energy storage revenue fell, though the company attributes this to the timing of large deployments. Still, given the longer-term potential and the gradual rebound in EV demand, the company is well-positioned to succeed.
Again, much of Tesla’s growth is already baked into the stock with a nearly $1.5 trillion market cap. Investors in Tesla will need patience and a longer time horizon to realize gains attributable to a booming energy industry and a rebounding EV market.
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Catie Hogan has positions in Rivian Automotive. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends BYD Company. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
