You could say Elon Musk had a really, really good day, and that would be an understatement. On Tuesday, Tesla released its production figures for the second quarter of 2019. The company delivered 95,200 vehicles between April 1 and June 30, which was both a record number and a good bit more than Wall Street had predicted. According to the Wall Street Journal, a survey of analysts had set expectations at 90,680. 

All eyes were on the Tesla Model 3, Tesla's first compact car, and its most affordable model. Last quarter, Tesla finally began delivering a $35,000 version of that model, and it delivered 77,550 Model 3 cars overall, again beating analysts' expectation of 74,100. 

The last few quarters have bounced between great and terrible for Tesla. In the third quarter of 2018, the company turned a profit for the first time and delivered a record number of cars, a success that may have been partly due to Musk's superhuman but unsustainable efforts to make sure things ran smoothly. In the fourth quarter, the company set its previous record by delivering 90,700 cars in total.

Then came the first quarter of this year and everything seemed to fall apart. Deliveries sank to only 63,000 vehicles and Tesla's stock price dropped 8 percent. Before the most recent results, its share value was down about 33 percent so far in 2019. At the time, Musk told analysts that the company hit some snags as it began delivering Teslas to Europe and to China for the first time. It appears those issues have been dealt with. The market reacted happily, boosting Tesla's shares back up by 7 percent in after-hours trading.

Wall Street naysayers.

Despite all this good news, Wall Street analysts remain very skeptical about Tesla's future deliveries and profits for reasons that range from the sensible to idiotic. On the sensible end, some analysts question whether Tesla can make money selling its Model 3s at $35,000, since electric car batteries tend to be pricey. That's a legitimate question, given that the Model 3 is the first Tesla model to depend on "rare earths" for its batteries. Rare earths are not so much rare as difficult to come by. That's because the process for extracting them is costly and bad for the environment. China is the world's primary source for these minerals, and as electric car production continues to rise, demand for them is outstripping supply. 

A second concern, raised by some Wall Street analysts, is that Tesla may be unable to meet its production projections of 360,000 to 400,000 cars for all of 2019. And indeed, the year is half over and the company has delivered fewer than 160,000 cars. But you have to ask--except for driving the stock price higher or lower in the very short term--how much does it really matter if Tesla meets or misses its ambitious 2019 goal? If the company is moving toward larger production and consistently profitability, both of which seem to be true, does it really matter that much if it ships 360,000 cars this year versus 350,000?

The biggest Wall Street concern is the one that strikes me as silliest of all--the worry that as Tesla ramps up production to greater levels and pumps out Model 3s ever more quickly, it will run out of people who want one. The question of whether Tesla can reach its ambitious 2019 production goals "is now a demand story rather than a production story," as one industry analyst put it in a newsletter. Tesla pessimists argue that since federal financial incentives for Tesla buyers are being phased out, and most Chinese and European customers who were eagerly awaiting their chance to buy a Tesla have now bought one, you should expect demand to start leveling off or dropping.

Here's why they're wrong.

To me, this reflects the thought process of an industry that has consistently underestimated the appeal of Tesla cars throughout the company's history. First of all, no one questions that the demand for electric cars in general will only rise--especially since several countries, including India and China, the two most populous in the world--have announced plans to start banning sales of new gas cars within the next few decades. So the question is not whether people will keep buying electric cars--they will--but whether they will choose Teslas over other options. And indeed, with new electric models being released at a rapid pace, Tesla faces more competition than it has in the past, at the same time as its government incentives are disappearing.

To continuing seeing high demand, Teslas would have to be much more appealing than other electric cars. Here's the thing: They are. By far, the biggest concern for electric car drivers is "range anxiety"--the fear of running out of juice before you can reach your destination or a charging station. Tesla addresses that problem really well. First, it has the longest-range EVs on the market, and not just at the high end. Even the lowest-end Model 3 has an artificially limited range of 220 miles, and some Model 3s can go well over 300 miles. Next, Tesla has built a widespread charging network for its cars. And finally, Tesla cars, with an adapter, can use nearly any charging station. Then there are the self-driving features and other technological perks of driving a Tesla, not to mention the fact that a Tesla is a status symbol.

Wall Street analysts' unceasingly bleak predictions on Tesla remind me of a line from the movie Mask about a boy named Rocky Dennis who had a very rare and extremely disfiguring bone disorder. When yet another doctor tells his mother (played by Cher) that he's not likely to live long, she retorts that if she'd started digging his grave every time a doctor told her he was dying, she'd be in China by now.

I think the same goes for Tesla. The company may struggle to remain profitable if the price of battery components rises. Elon Musk's volatility and antics will continue to make headlines for the foreseeable future. But people are going to keep buying the cars as fast as Tesla can make them. That won't change any time soon.

Published on: Jul 3, 2019
Like this column? Sign up to subscribe to email alerts and you'll never miss a post.
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.