Tesla is expected to report a 6% decline in June-quarter deliveries, marking the first instance of two consecutive quarters of decline for the leading electric vehicle (EV) manufacturer. Analysts predict Tesla will deliver 438,019 vehicles for the April to June period, based on estimates from 12 analysts polled by LSEG. This forecast comes as Tesla grapples with increased competition in China and sluggish demand due to a lack of new affordable models.
The company, which has seen rapid growth and become the world’s most valuable automaker, warned in January that its deliveries growth for 2024 would be significantly lower as the effects of price cuts wear off. Additionally, a shift in consumer preference towards cheaper gasoline-electric hybrid vehicles has resulted in Tesla accumulating a growing inventory of unsold vehicles. To address this, Tesla has implemented price cuts and offered incentives such as cheaper financing options and leases.
Earlier this year, CEO Elon Musk shelved plans for an all-new, cheaper electric car, redirecting Tesla’s focus towards robotaxis. This move has raised concerns among investors who are wary of the challenges associated with perfecting autonomous technology. Despite these concerns, investors approved Musk’s $56 billion pay package at the annual shareholder meeting last month.
Barclays analyst Dan Levy predicts an 11% drop in second-quarter deliveries, the largest in Tesla’s history. Levy cautioned that “a soft delivery result could turn attention back to the currently challenging fundamental environment for Tesla.” The company’s stock has lost a quarter of its value this year, making it one of the worst performers on the S&P 500, despite Musk’s optimistic forecast for increased sales. In response to these challenges, Musk has implemented cost-cutting measures, including mass layoffs that affected Tesla’s supercharging team.
On a positive note, Tesla shares rose 6.1% on Monday following strong second-quarter sales reports from Chinese automakers like BYD. However, some analysts anticipate Tesla may experience its first annual sales drop this year. In the January-March period, Tesla’s deliveries saw their steepest decline in nearly four years and fell short of Wall Street expectations. Sales in Europe have also been particularly weak, with a 36% drop in May due to reduced EV subsidies and declining demand from fleet operators.
To compete with cheaper models from Chinese rivals, Tesla has been slow to introduce new designs. Musk announced plans to launch “new models” later this year, including affordable vehicles, but provided no pricing details. The company has refreshed its Model 3 sedan and started deliveries of its Cybertrucks late last year. However, mass production of the Cybertruck is not expected until 2025 due to recalls and quality issues.
In May, Tesla omitted its ambitious goal of delivering 20 million vehicles annually by 2030 from its latest impact report, a shift from its previous long-term annual growth target of 50% for EV deliveries. Tesla plans to unveil robotaxis on August 8 to boost the adoption of its “Full Self-Driving” software, but production timelines and volumes remain unclear.
READ MORE: