Tesla deliveries fall 5% in second straight decline
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Elon Musk's Tesla saw a drop in vehicle deliveries for the second quarter in a row, as the company faces challenges with lower demand and formidable competition from Chinese rivals in the electric vehicle market.
The company shipped a total of 443,956 vehicles worldwide during the three months leading up to June. This number was 4.7 percent lower compared to the previous year, but it surpassed the predictions of Wall Street analysts.
The number of vehicles delivered by the company exceeded the number of deliveries made by China's BYD. BYD had reported 426,000 deliveries in the second quarter, showing a 21% increase from the previous year. Investors are interested in seeing if BYD can surpass Tesla in sales once more, like it did in the last quarter of 2023.
Tesla is entering a period of reduced sales growth and profits after experiencing fast growth for many years. Regular buyers are still unsure about electric cars, leading to challenges for the company. In response to rising competition from Chinese brands like BYD, Tesla has lowered prices on some of its car models.
Back in January, they cautioned that the increase in deliveries expected for 2024 would be significantly less because the impact of lower prices over several months was starting to fade away. During this quarter, the company exceeded what analysts had predicted - 439,302 vehicles - for the period from April to June, according to the average estimate from Bloomberg.
The electric vehicle industry has become increasingly competitive, with sales increasing at a slower pace than anticipated due to general consumers being hesitant to purchase due to the higher prices compared to traditional gas-powered cars.
Tesla is facing even more challenges as consumers are moving towards more affordable hybrid vehicles. Unlike traditional car companies, Tesla doesn't have any gasoline or hybrid models as a backup plan. In addition, the company's stockpiles have grown by over 136% in the last two years.
According to experts at Jefferies, Tesla's share of the electric vehicle market has reached a stable level. While its software continues to outperform many competitors that are progressing slowly, the same cannot be said for the Chinese market. Philippe Houchois stated in a memo that a stagnant Tesla poses a smaller risk to other carmakers until there is a renewed increase in demand for electric vehicles.
The value of Tesla stock has decreased by 15 percent since the beginning of the year.
Further investigation done by Gloria Li from Hong Kong
