Tesla Inc. disclosed on Tuesday a second consecutive quarterly decline in global sales, despite implementing price reductions and financing incentives in an effort to stimulate demand. The Austin-based company sold 436,956 vehicles between April and June, a 4.8% drop from the 466,140 vehicles sold during the same period last year. However, this figure surpassed analysts’ expectations of 436,000 units.
The dip in sales underscores broader challenges within the electric vehicle (EV) sector, where Tesla faces heightened competition from both established automakers and emerging startups. Despite these hurdles, Tesla maintained its position as the world’s leading EV manufacturer, outpacing China’s BYD with over 910,000 vehicles sold globally in the first half of the year, compared to BYD’s 726,153.
The majority of Tesla’s recent sales were driven by its more affordable Models 3 and Y, while higher-end models such as the X, S, and the new Cybertruck accounted for a smaller portion with just 21,551 units sold. The company slashed prices across several models earlier this year, with reductions ranging from $2,000 on the Model Y to $2,340 on revamped Model 3s.
To further incentivize purchases, Tesla offered competitive financing rates, including 0.99% for up to six years on the Model Y and 1.99% for three years on the rear-wheel-drive Model 3, well below the industry average. Moreover, Tesla reduced the price of its “Full Self Driving” system by 33% to $8,000, although the system requires driver oversight.
Analysts attribute Tesla’s sales challenges to market saturation among early adopters of EVs and skepticism among mainstream buyers regarding EV suitability. Jessica Caldwell from Edmunds.com highlighted Tesla’s stagnant model lineup as a factor contributing to declining sales, exacerbated by plummeting prices in the used market, which compete favorably on affordability.
Despite these obstacles, Wedbush analyst Dan Ives expressed optimism, noting Tesla’s recent cost-cutting measures and predicting a turnaround in its growth trajectory. Tesla’s forthcoming developments include plans to unveil a dedicated robotaxi on August 8, aiming to capture new market segments amidst evolving consumer preferences and competitive pressures.
Tesla’s stock rose over 6% following the sales announcement, reflecting investor optimism amidst signs of stabilization in sales performance. Despite a year-to-date decline of 11% in its share price, recent gains suggest renewed confidence in Tesla’s ability to navigate market challenges and sustain its leadership in the EV industry.