Tesla shares rally as Q2 deliveries fall less than expected

(Reuters) -- Tesla on Tuesday reported a smaller-than-expected 5% drop in vehicle deliveries in the second quarter, as the electric carmaker's price cuts and incentives helped mitigate cooling demand.

Shares of the world's most valuable automaker rallied more than 10% on Tuesday, hitting the highest level in nearly six months.

The higher-than-expected deliveries data "greatly assuages concerns regarding softening EV demand," CFRA Research analyst Garrett Nelson said. "The stock continues to ride a wave of positive momentum following its annual meeting in mid-June in which shareholders re-approved Musk's 2018 compensation plan," he said, referring to CEO Elon Musk.

While the stock rebound and delivery figures were viewed by some analysts and investors as a sign of possible improvement for Tesla ahead of its robotaxi reveal on Aug. 8, others worried that the EV maker is exhausting its "bag of tricks," according to research firm Edmunds, with its price cuts and higher incentives.

Tesla handed over 443,956 vehicles in the three months to June 30, 4.8% lower than a year earlier and up 14.8% from the preceding quarter.

Wall Street on average had expected the company to deliver 438,019 vehicles, according to 12 analysts polled by LSEG. Tesla delivered 422,405 Model 3 and Model Ys, and 21,551 units of other models, which include the Model S sedan, Cybertruck and Model X premium SUV. It produced 410,831 vehicles during the April-June period.

Tesla has been slow to refresh its car lineup at a time when rivals, especially in China, have come up with new affordable models, and as high interest rates dampen demand.

Despite headwinds for its mainstay car business, investors overwhelmingly voted in favor of Musk's record $56 billion pay