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For the first time, the electric automaker’s quarterly deliveries have declined for two consecutive quarters.
Despite price cuts and financing incentives, Tesla global sales declined for the second consecutive quarter, indicating a potential slowdown in demand for the company’s electric vehicles and possibly the broader EV market.
Tesla reported delivering 443,956 vehicles in Q2 (April-June), a 4.8% decrease from the same period last year (466,140). However, this number surpassed analysts’ predictions of 436,000 for the quarter.
While the global electric vehicle market is experiencing a slowdown in growth, most manufacturers are weathering it better than Tesla. This could be due to Tesla’s reliance on a maturing model lineup and higher average vehicle prices compared to competitors.
Despite facing slower sales growth, Tesla clung to the crown of the world’s best-selling electric vehicle manufacturer in the first half of 2024. They delivered over 910,000 vehicles globally, comfortably outscoring China’s BYD, which sold 726,153 units.
In a positive sign for managing inventory, Tesla sold over 33,000 more vehicles than it produced during the second quarter. This suggests a decrease in the number of cars stockpiled at dealerships.
Tesla’s sales decline remains unexplained, with earnings details due July 23rd. This comes amidst rising competition from established and new automakers vying for a slice of Tesla’s market share.
Almost all of their sales were from the more affordable Models 3 and Y, with the company selling only 21,551 units of its higher-end models, which include the Model X, Model S, and the new Cybertruck.
The sales decline occurred despite Tesla reducing prices by $2,000 for three of its five models in the US in April. The price cuts included the Model Y, Tesla’s most popular model and the top-selling electric vehicle in the US, as well as the Models X and S. Additionally, during the quarter, Tesla slashed the price of its “Full Self Driving” system by roughly a third. However, this system still requires drivers to remain alert and ready to intervene.
According to Jessica Caldwell, head of insights at Edmunds.com, Tesla faces a tougher market now that early adopters have already bought EVs. Mainstream consumers, she says, are unsure if electric vehicles can fulfill their needs.
Caldwell highlights additional challenges for Tesla. First, the lack of significant updates to their model lineup makes them less attractive to some buyers. Second, Tesla’s price cuts have triggered a drop in used Tesla prices, creating a very competitive market for budget-conscious consumers seeking a Tesla experience. “The monthly payments for a good used Tesla are hard to beat,” she concluded.
Caldwell doesn’t anticipate any significant catalyst for boosting Tesla sales this year unless gasoline prices surge. The new Cybertruck is being sold in limited quantities, and the rest of the lineup is aging. “Most people would struggle to distinguish which model is newer and which one is older,” she remarked.
Wedbush analyst Dan Ives is bullish on Tesla’s future. He calls Q2 sales a “huge comeback” and suggests the company’s worst times are over. He points to workforce reductions and hints at renewed growth for Tesla.
Tesla had previously forecasted “significantly slower” sales growth for 2024, reflected in a stock price drop exceeding 40% earlier this year.
In conclusion, Tesla’s ongoing sales challenges highlight the complexities of the evolving electric vehicle market. As the company navigates price adjustments and introduces new models like the Cybertruck, it remains to be seen how these strategies will impact its future performance and market position.
