Tesla running out of excuses for its prolonged sales slump
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Analysts are estimating the carmaker will report on July 2 that it handed over 441,019 electric vehicles in the second quarter, a 5.4 per cent drop from a year ago.
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OAKLAND, California – Tesla is expected to report another quarter of weaker sales, and it is running out of alibis.
Analysts are estimating the carmaker will report on July 2 that it handed over 441,019 electric vehicles (EVs) in the second quarter, a 5.4 per cent drop from a year ago. This would be a second consecutive quarterly decline, which Tesla last posted when it was phasing out its first model, the Roadster, in 2012.
Tesla has turned the page on several of the issues that contributed to its struggles in early 2024, including a suspected arson attack at its factory near Berlin and shipping diversions related to the conflict in the Red Sea.
That leaves the company with few excuses for its sales slowdown, aside from a relatively straightforward problem: Tesla’s older line-up of vehicles is having a harder time keeping up with fresher offerings from rival EV manufacturers.
“It’s tougher to grow when you have increased competition and the current model line-up is a little stale,” said Mr Tom Narayan, a global autos analyst at RBC Capital Markets, who has the equivalent of a buy rating on Tesla’s stock.
Chief executive Elon Musk has tried all sorts of moves to stoke demand for Tesla’s vehicles, including slashing prices and offering cut-rate leasing deals. But the discounting did not stop the company’s sales from decelerating in the second half of 2023, before giving way to decline as the broader EV market cools.
Mr Musk also announced deep staffing cuts in April, which affected more than 10 per cent of Tesla’s workers, including sales staff. While that may have helped the company conserve cash, it also may have factored in its second-quarter delivery numbers.
Customers who are new to EVs typically have lots of questions about battery range, charging stations and software-based features. Mr Musk is nevertheless increasingly betting on a mostly online sales process and encouraging consumers to order Teslas without even visiting a showroom.
Tesla is having a hard time building on the success of the Model Y, which was the best-selling vehicle in the world in 2023. The sport utility vehicle has been on the market since 2020, while the Model 3 sedan debuted three years earlier.
The company’s first pickup, the Blade Runner-inspired Cybertruck, has got off to a slow start since production began in late 2023. Tesla has recalled the truck several times, including over issues related to its accelerator pedal and windshield wiper.
Investors have shrugged off several analysts lowering their estimates for Tesla’s vehicle deliveries in recent weeks.
While the stock is still down 20 per cent for the year, Mr Musk has buoyed the shares by promising new models as soon as in late 2024. He has also talked up prospects for the company’s humanoid robots and plans to unveil a dedicated robotaxi in August.
Mr Musk received a major vote of confidence in June, when shareholders voted in favour of re-approving his US$56 billion (S$76 billion) compensation package.
Robert W. Baird analyst Ben Kallo expects Tesla to deliver 435,200 units this quarter and about 1.83 million for the year, up only slightly from its total in 2023.
While the company vowed in April to introduce fresh models by early 2025, it did not provide any details on the cars and reiterated that growth will be “notably lower” in 2024. BLOOMBERG
