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Tesla reported a second straight decline in quarterly vehicle deliveries, as the world’s largest electric vehicle maker continues to struggle with weaker demand and fierce competition from lower-cost Chinese rivals.
The company delivered 443,956 vehicles globally in the three months through June — down 4.7 percent from a year earlier but slightly ahead of Wall Street expectations for 439,302. Sales rebounded from a disappointing 386,810 in the first quarter, helping shares rise 8.5 percent on Tuesday.
Tesla also retained its position as the world’s largest EV company. China’s BYD reported earlier the same day that deliveries totaled 426,000 in the second quarter, up 21 percent from the previous year. Investors are focused on whether BYD can overtake Tesla again, as it did in the last quarter of 2023.
“This was a huge comeback performance from Tesla and Musk… with global demand for electric vehicles still volatile,” Wedbush analyst Dan Ives said. “While it has been a tough period for Tesla and the company has made some significant cost cuts to maintain its bottom line, it appears that better days are now ahead,” he added.
Tesla has had a turbulent 2024 so far. CEO Elon Musk won two contentious votes at last month’s annual meeting when shareholders reapproved his historic $56 billion payout — which had been rejected by a Delaware court — and backed a proposal to reincorporate the company in Texas.
Buoyed by his victories, Musk, who also runs SpaceX, social media platform X and artificial intelligence startup xAI, is repositioning Tesla as a robotics and AI company. He has promised to unveil plans for a fully autonomous “robotaxi” on August 8.
Still, Tesla is cutting costs as it heads into another period of lower sales growth and margins after years of rapid expansion. Mainstream buyers remain skeptical of electric vehicles, which are more expensive to buy, insure and repair. Tesla hasn’t released a new vehicle in several years and earlier this year scaled back plans for a new, lower-cost model.
The stock price has fallen 18 percent over the past 12 months and the company’s market capitalization has nearly halved from its peak of $1.2 trillion in November 2021.
Compounding Tesla’s woes is consumer preference for cheaper hybrid models. Unlike traditional manufacturers, the EV maker doesn’t make gasoline or hybrid models to fall back on. Meanwhile, inventory is growing — up more than 136 percent in the past two years.
The Austin-based company has had to slash purchase and lease prices on some of its models amid 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 industry-leading global network of fast-charging stations.
Tesla’s EV market share has stagnated, according to analysts at Jefferies. While its software still outpaces most “slow” competitors, this is not the case in China. “A stagnant Tesla poses less of a threat to other manufacturers until EV demand picks up again,” Philippe Houchois said in a note.
One 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 homes and “Megapacks” for commercial businesses.
“Energy storage has been exceptional, which is indicative of market share gains,” said Tom Narayan, an analyst at RBC Capital Markets. “We actually value it more than Tesla’s auto business… Battery storage has a huge [potential market] and is already more profitable than its cars.”
Additional reporting by Gloria Li in Hong Kong