Tesla sales fall for second straight quarter despite price cuts, but beat analyst expectations
Tesla sales fall for second straight quarter despite price cuts, but beat analyst expectations
Tesla’s global sales fell for the second straight quarter despite price cuts and low-interest financing offers, another sign of weaking demand for the company’s products and electric vehicles overall
ByTOM KRISHER AP auto writer
July 2, 2024, 9:17 AM
DETROIT -- Tesla's global sales fell for the second straight quarter despite price cuts and low-interest financing offers, another sign of weaking demand for the company's products and electric vehicles overall.
The Austin, Texas, company said Tuesday that it sold 436,956 vehicles from April through June, down 4.8% from 466,140 sold the same period a year ago. But the sales were better than the 436,000 that analysts had expected.
Demand for EVs worldwide is slowing, but they're still growing for most automakers. Tesla, with an aging model lineup and relatively high average selling prices, has struggled more than other manufacturers but still is likely to remain the EV leader in the U.S. and across the world.
Tesla's sales decline comes as competition is increasing from legacy and startup automakers, which are trying to nibble away at Tesla's market share. Most other automakers will report U.S. sales figures later Tuesday.
The company gave no explanation for the sales decline, which is a harbinger of what to expect when Tesla posts second-quarter earnings on July 23.
Nearly all of Tesla’s sales came from the smaller and less-expensive Models 3 and Y, with the company selling only 21,551 of its more expensive models that include X and S, as well as the new Cybertruck.
The sales decline came despite Tesla knocking $2,000 off the prices of three of its five models in the United States in April. The company cut the prices of the Model Y, Tesla’s most popular model and the top-selling electric vehicle in the U.S., and also of the Models X and S.
The April cuts reduced the starting price for a Model Y to $42,990 and to $72,990 for a Model S and $77,990 for a Model X. Last week, Tesla lopped $2,340 off the $38,990 base price of some newly revamped Model 3s that were in the inventory shipped to its stores.
In addition, Tesla in May offered 0.99% financing for up to six years on the Model Y. In June, it offered interest as low as 1.99% for three years on the rear-wheel-drive Model 3. Typical new-vehicle interest rates average just over 7%, according to Edmunds.com.
Also during the quarter, Tesla knocked roughly a third off the price of its “Full Self Driving” system — which can’t drive itself and so drivers must remain alert and be ready to intervene — to $8,000 from $12,000, according to the company website.
Jessica Caldwell, head of insights for Edmunds.com, said Tesla is having trouble in a market where most early adopters already have EVs, and mainstream buyers are more skeptical that electric cars can meet their needs. “They’re more pragmatic. They want to know where am I charging? What will this cost me?” she said.
Tesla also has a set of unique problems, mainly a model lineup that doesn’t look much different than it did years ago. With Tesla’s price cuts, used vehicle prices tumbled. Anyone wanting a Tesla can get a far better deal buying a used one, Caldwell said. “If you’re looking at monthly payments, it’s hard to compete against,” she said.
Caldwell doesn’t see any big catalyst this year that would boost Tesla sales unless gasoline prices spike. The new Cybertruck is being sold only in small numbers, and the rest of the lineup is old. “Most people would be hard pressed to figure out which one is the newer one and which one is the older one,” she said.
Wedbush analyst Dan Ives, who normally is bullish on Tesla stock, wrote in an email that he expects Tesla to hit analyst estimates for second-quarter sales due to higher incentives. He wrote that “still demand challenges abound,” but year-over-year sales growth is “doable but a stretch” this year.