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Tesla reported a second straight quarterly decline in vehicle deliveries as the world’s largest electric vehicle maker continues to suffer from slowing demand and stiff competition from cheaper Chinese rivals.
In the three months to June, the company delivered 443,956 vehicles worldwide – down 4.7 percent from a year earlier but slightly above Wall Street expectations for 439,302 vehicles. Sales rebounded from a disappointing 386,810 in the first quarter, helping the stock rise 8.5 percent on Tuesday.
Tesla also maintained its position as the world’s largest EV company. Earlier on the same day, China’s BYD reported that second-quarter deliveries reached 426,000, up 21 percent from a year earlier. Investors focused on whether BYD could overtake Tesla again, as it did in the last quarter of 2023.
“It was a huge comeback from Tesla and Musk. . . demand for EVs is still choppy globally,” said Wedbush analyst Dan Ives. “While it’s been a tough time for Tesla and the company has gone through several significant cost cuts to maintain its bottom line/profitability, it looks like better days are ahead,” he added.
Tesla has an eventful 2024 so far. CEO Elon Musk won two contested votes at last month’s annual meeting when shareholders re-approved his historic $56 billion bonus — which was overturned by a Delaware court — and backed a proposal to reincorporate the company in Texas.
Buoyed by his wins, Musk, who also runs SpaceX, social media platform X and artificial intelligence startup xAI, is repositioning Tesla as a robotics and AI company. He promised to unveil plans for a fully autonomous “robotaxis” on August 8.
Still, Tesla is cutting costs as it faces a new period of lower revenue and margin growth after years of rapid expansion. Regular buyers remain skeptical of electric cars, which are more expensive to purchase, insure and repair. Tesla hasn’t released a new vehicle in several years and earlier this year floated plans for a new low-cost model.
Its shares have fallen 18 percent over the past 12 months, and the company’s market capitalization has nearly halved from a peak of $1.2 trillion in November 2021.
Adding to Tesla’s woes is a consumer preference for cheaper hybrid models. Unlike older manufacturers, the EV maker doesn’t produce gasoline or hybrid models to rely on. Meanwhile, its stock is rising — up more than 136 percent over the past two years.
The Austin-based company has had to cut purchase and lease prices for some of its models in the face of increased competition from Chinese rivals such as BYD. Musk also abruptly laid off more than 10 percent of Tesla’s workforce in April, including the entire supercharger team that oversaw the company’s world-leading network of fast-charging stations.
According to analysts at Jefferies, Tesla’s share of the EV market has stabilized. Although its software remains ahead of most “slow-moving” peers, that is not the case in China. “A stagnant Tesla is less of a threat to other manufacturers until EV demand picks up again,” Philippe Houchois said in a note.
The bright spot was the energy storage business, which deployed 9,400 megawatt hours in the second quarter, compared with 4,053 hours in the first three months of the year. The division produces “Powerwall” batteries for individual households and “Megapacks” for commercial businesses.
“Energy storage was exceptional, indicating an increase in market share,” said RBC Capital Markets analyst Tom Narayan. “We actually value it more than Tesla’s auto business. . . The battery storage is huge [potential market] and is already more profitable than his cars.”
More news from Gloria Li in Hong Kong