Tesla’s global sales fell for the second straight quarter despite price cuts and low-interest financing offers, another sign of weakening demand for the company’s products and electric vehicles overall.
The Austin, Texas, company said on Tuesday that it sold 443,956 vehicles from April through June, down 4.8% from 466,140 sold the same period a year ago. The sales were better than the 436,000 figure that analysts had expected.
Demand for EVs worldwide is slowing, but they’re still growing for most automakers. Tesla, with an aging model lineup and relatively high average selling prices, has struggled more than other manufacturers.
Still, it retained the title of the world’s top-selling electric vehicle maker. For the first half of the year, Tesla sold more than 910,000 vehicles worldwide, handily beating China’s BYD, which sold 726,153.
Tesla also sold over 33,000 more vehicles during the second quarter than it produced, which should reduce the company’s inventory on hand at its stores.
Tesla gave no explanation for the sales decline. The company will post second-quarter earnings on 23 July. The electric automaker’s sales decline comes as competition is increasing from legacy and startup automakers, which are trying to nibble away at the company’s market share. Most other automakers will report US sales figures later on Tuesday.
Nearly all of Tesla’s sales came from the smaller and less-expensive Models 3 and Y, with the company selling only 21,551 of its more expensive models that include the X and S, as well as the new Cybertruck.
The sales decline came despite Tesla knocking $2,000 off the prices of three of its five models in the US in April. The company cut the prices of the Model Y, Tesla’s most popular model and the top-selling electric vehicle in the US, and also of the Models X and S. Also during the quarter, Tesla knocked roughly a third off the price of its “Full Self Driving” system – which can’t drive itself and so drivers must remain alert and be ready to intervene.
Jessica Caldwell, head of insights for Edmunds.com, said Tesla is having trouble in a market where most early adopters already have EVs, and mainstream buyers are more skeptical that electric cars can meet their needs.
Tesla also has a set of unique problems, mainly a model lineup that doesn’t look much different than it did years ago, Caldwell said. With Tesla’s price cuts, used vehicle prices tumbled. Anyone wanting a Tesla can get a far better deal buying a used one, Caldwell said. “If you’re looking at monthly payments, it’s hard to compete against,” she said.
Caldwell doesn’t see any big catalyst this year that would boost Tesla sales unless gasoline prices spike. The new Cybertruck is being sold only in small numbers, and the rest of the lineup is old. “Most people would be hard pressed to figure out which one is the newer one and which one is the older one,” she said.
Wedbush analyst Dan Ives wrote in a note to investors on Tuesday that second-quarter sales were a “huge comeback performance” for Tesla. “In a nutshell, the worst is in the rearview mirror for Tesla,” he wrote. The company, he wrote, cut 10% to 15% of its workforce to reduce costs and preserve profitability. “It appears better days are now ahead as the growth story returns,” Ives wrote.
In its letter to investors in January, Tesla predicted “notably lower” sales growth this year. Tesla shares had been down more than 40% earlier in the year.
