Tesla reported from its Austin, Texas headquarters on Thursday that it delivered 480,126 vehicles worldwide during the second quarter while producing 451,758 vehicles, comfortably beating Wall Street expectations. Despite the stronger-than-expected delivery numbers, shares of Elon Musk’s electric-vehicle maker fell about 7% as investors shifted their attention to profitability and margins ahead of the company’s earnings report later this month.

Tesla’s deliveries easily surpassed both the company’s internal consensus estimate of 406,024 vehicles and the 406,600 average forecast compiled by StreetAccount. Deliveries also increased 34% from the first quarter, when Tesla delivered 358,023 vehicles, bringing the company close to its all-time quarterly record.

The company’s core lineup continued to dominate sales. The Model 3 sedan and Model Y SUV accounted for 467,762 deliveries, representing roughly 97% of all vehicles sold during the quarter. The remaining 12,364 vehicles, including the Cybertruck and other premium models, made up the balance.

Tesla’s fast-growing energy storage business also remained a bright spot. The company deployed 13.5 gigawatt-hours of battery storage during the quarter, up sharply from 9.6 gigawatt-hours a year earlier. Although the figure came in slightly below analysts’ expectations of approximately 13.8 gigawatt-hours, the energy division continues to generate significantly higher margins than Tesla’s automotive business and has become an increasingly important contributor to overall earnings.

So why did the stock fall despite the strong delivery numbers?

Analysts pointed to the gap between production and deliveries. Tesla delivered approximately 28,000 more vehicles than it produced, indicating the company reduced existing inventory rather than meeting demand solely through new production. While lowering inventory is generally viewed positively, investors typically place greater value on sustained demand supported by ongoing factory output.

The shares had also rallied ahead of the report, leaving little room for additional upside after the delivery announcement.

Attention now turns to July 22, when Tesla will release its full second-quarter financial results after markets close. Investors will be watching closely for average selling prices, operating margins, and profitability—figures that will determine whether the rebound in deliveries translated into stronger earnings.

Tesla cautioned that quarterly deliveries and energy deployments should not be viewed as indicators of financial performance, noting that earnings depend on multiple additional factors.

Regionally, Europe showed signs of recovery following a difficult start to the year, when consumer backlash tied to Musk’s political activity contributed to weaker registrations across Germany, France, and Scandinavia. China also improved following the launch of the refreshed Model Y, although intense competition from BYD and other domestic manufacturers continues to pressure pricing.

North America remained more challenging as buyers increasingly shifted toward hybrid vehicles while the expiration of the federal electric vehicle tax credit weighed on fully electric vehicle demand.

For Tesla, the second quarter suggests its core automotive business may be stabilizing after two consecutive years of declining annual sales. Whether that recovery proves sustainable—and whether it can occur without sacrificing the industry-leading margins that once defined the company—will become much clearer when Tesla reports earnings later this month.

JBizNews Desk | Austin, Texas

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