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Tesla Deliveries Expected to Decline for Second Consecutive Quarter
Tesla's June quarter deliveries are likely to drop by 6%. Analysts expect that around 438,019 automobiles will be delivered. Competition in China, as well as a lack of affordable models, contribute to the fall.
This comes as the company faces stiff competition in China and slow demand due to a scarcity of affordable new models.
According to LSEG's poll of 12 analysts, Tesla is expected to produce around 438,019 units between April and June. Interestingly, seven of these analysts have lately changed their forecasts downward. Official results are likely to be announced on Tuesday.
After years of tremendous expansion that drove Tesla to the world's most valuable manufacturer, the business has encountered a stumbling hurdle. In January, Tesla predicted that delivery growth in 2024 would be much lower as the impact of months-long price discounts faded.
In addition to these issues, Tesla is dealing with a shift in consumer desire for lower-cost gasoline-electric hybrid automobiles. This has resulted in an increasing inventory of vehicles, which the corporation is attempting to sell through price cuts and incentives, as well as more affordable finance and lease alternatives.
Earlier this year, CEO Elon Musk decided to abandon plans for a new, cheaper electric automobile in favour of focusing on robotaxis. While this action sparked concerns among some investors about the viability of perfecting autonomous technology, shareholders overwhelmingly supported Musk's record $56 billion compensation package at the most recent annual meeting.
According to Barclays analyst Dan Levy, Tesla's second-quarter deliveries will fall 11%, the greatest reduction in the company's history. According to Levy, a disappointing delivery result may attract attention to Tesla's current problematic underlying situation.
Despite Musk's April forecast that Tesla would be able to increase sales this year, the company's stock has already lost a quarter of its value, making it one of the worst performers on the S&P 500. To cut costs, Tesla has implemented mass layoffs, including within its supercharging team.
However, there is a glimmer of hope for Tesla as its stock rose by 6.1% on Monday following strong second-quarter sales reported by Chinese automakers like BYD.
Analysts are now speculating that Tesla may experience its first annual sales drop this year. In the January-March period, deliveries saw the largest decline in nearly four years, falling short of Wall Street expectations.
Tesla's sales have been particularly weak in Europe, with a 36% decrease in May. This can be attributed to the reduction of EV subsidies and poor demand from fleet operators, who accounted for nearly half of Tesla's sales in the region last year.
In May, it was reported that Tesla was working to mend relationships with European leasing firms after repeated retail price cuts negatively impacted the value of their fleets. Slow service and expensive repairs also alienated corporate customers.
While competitors in China have been introducing more affordable models, Tesla has been slow to bring new designs to the market. Although Musk mentioned the introduction of "new models" later this year, including affordable vehicles, no specific details regarding pricing have been provided.
Tesla refreshed its Model 3 sedan towards the end of last year, but without any major design changes. The Model Y SUV, Model S premium sedan, and Model X SUV have also remained largely unchanged for years.
Although Tesla began deliveries of its Cybertrucks late last year, mass production of the vehicle is not expected until 2025. The pickup has faced recalls and quality issues.
In a significant shift, Tesla's latest impact report in May omitted its goal of delivering 20 million vehicles per year by 2030. This marks a departure from the company's long-standing target of achieving 50% annual growth in EV deliveries.
Tesla plans to unveil its robotaxis on August 8, aiming to boost the adoption of its "Full Self-Driving" software. However, it remains unclear when production will commence and how many robotaxis will be manufactured.
Tesla's June-quarter deliveries expected to decline by 6%
Analysts predict approximately 438,019 vehicles to be delivered
Competition in China and lack of affordable models contribute to the decline
Source: REUTERS