BMW  expects to make an operating profit this year despite losing 666 million euros ($787 million) in the second quarter after sales of its luxury cars slumped during coronavirus lockdowns, the company said on Wednesday.

The German manufacturer of BMWs, Minis and Rolls-Royces, said deliveries had begun to recover, including in China, but the rebound would not be enough to make up for the shortfall in sales lost to the pandemic.

Shares in BMW fell 3% following the results with some analysts saying they had not expected such a big loss in earnings before interest and taxes (EBIT).

BMW also said its outlook did not factor in the potential impact of a second wave of COVID-19 infections, nor the prospect of a more sustained or deeper recession in its key markets.

The pandemic has hit Fiat Chrysler , Ford and Daimler  particularly hard at time when the traditional auto industry is ramping up spending on low-emission technologies ahead of stringent European anti-pollution rules.

BMW’s EBIT margin for cars slumped to minus 10.4% from 6.5% in the second quarter last year, when it’s operating profit came in at 2.2 billion euros. It delivered 485,464 cars in the second quarter, down 25% from a year earlier.

By contrast, electric car pioneer Tesla  saw its automotive gross margin widen to 25.4% in the second quarter, up from 18.9% a year earlier, despite a 5% drop in deliveries.

Jefferies analyst Philippe Houchois said BMW’s margin forecast for the year as a whole suggested a healthy recovery in the second half of 2020, even though the second-quarter results were below the consensus.

In May, BMW warned it would post a second-quarter loss and slashed its outlook, forecasting an automotive EBIT margin of 0% to 3% for 2020 compared with the 2%-4% range it expected before the pandemic struck.

“We are now looking ahead to the second six-month period with cautious optimism and continue to target an EBIT margin between 0% and 3% for the automotive segment in 2020,” BMW Chief Executive Oliver Zipse said in a statement.

BMW reiterated that it expected pretax profit to be significantly below 2019 levels and for car deliveries to customers to fall significantly this year.