While the strong first-quarter deliveries bode well for Tesla's financial results for the period, the bigger takeaway from the strong report is the company's impressive momentum on its growth plans. Not only is Tesla's year-over-year growth rate in vehicle deliveries accelerating, but this was the fastest growth in total vehicle deliveries the automaker has seen since the second quarter to 2019 -- and Tesla pulled this off even as it halted Model S and X production during the quarter to prepare its production lines for newer versions of the two vehicles.
Tesla's first-quarter deliveries jumped 109% year over year to 184,800. This was not only up significantly year over year but it was higher than Tesla's fourth-quarter 2020 deliveries of less than 181,000.
Achieving this kind of growth even as Tesla paused Model S and Model X production shows just how expertly the automaker is executing on its expansion plans. Driving this point home, Tesla's growth has even been accelerating on a trailing-12-month basis. For the trailing-12-month period ending March 31, the electric-car maker's deliveries were up 52% year over year, higher than rates not seen since 2019.
Of course, Tesla deliveries were negatively impacted by COVID-19 last year as the automaker endured temporary pauses in production. But Tesla's trailing-12-month growth today is even faster than it was in 2019, when the automaker was growing its deliveries on a much smaller base.
Further, Tesla's trailing-12-month growth rate will likely improve further in Q2, as the automaker's recent production ramp and the restart of Model S and X production should help Tesla report strong deliveries during the current quarter as well. Indeed, even if deliveries were only in line with the approximately 185,000 vehicles Tesla delivered in Q1, this would pull Tesla's trailing-12-month vehicle delivery growth rate to 78%.
Justification for a premium stock price
With recent execution in vehicle production and deliveries like this, it's no wonder investors are willing to pay a premium valuation for this growth stock.
Going forward, of course, Tesla will need to continue expanding production and growing deliveries to justify its stock's steep premium. Tesla currently trades at 23 times sales -- an expensive price for a company in a capital-intensive industry. The only way Tesla will be able to justify this valuation is with more rapid growth for years to come.
Fortunately, Tesla management seems to indicate that the company is still in its early innings. In its most recent quarterly financial report, Tesla said it expects deliveries to grow at an annualized rate of approximately 50% for the foreseeable future, with 2021 growth coming in even higher. It's certainly an ambitious view. But, for now, the company is delivering on that view.