Tesla Deliveries Anticipated to Decline for Second Consecutive Quarter

Tesla’s deliveries for the second quarter of 2023 are anticipated to have decreased by approximately 3.7%, marking the first consecutive quarterly decline for the prominent electric vehicle manufacturer. This development can be attributed to the intensifying competition within the Chinese market and a slowdown in demand resulting from the absence of new, cost-effective models.

As per the average estimate derived from forecasts provided by twelve analysts polled by LSEG, the company is projected to deliver approximately 438,019 vehicles during the April to June timeframe. It is noteworthy that seven of these analysts have revised their initial expectations downwards within the past three months. The official announcement of these results is anticipated to occur on Tuesday.

Tesla, after years of rapid growth that propelled it to the position of the world’s most valuable automaker, has encountered a temporary setback. In January, the company issued a cautionary statement indicating that delivery growth in 2024 is anticipated to be “considerably lower” as the positive impact of extended price reductions begins to diminish.

In addition to these challenges, a consumer shift towards more affordable gasoline-electric hybrid vehicles has resulted in an accumulating inventory of Tesla vehicles. To address this, the company has implemented price reductions and various incentives, such as more favorable financing options and leasing arrangements.

In the beginning of this year, Chief Executive Officer Elon Musk shelved the plans to manufacture an all-new, less expensive electric car and shifted Tesla’s focus to robotaxis, which raised concerns among certain investors who apprehend that autonomous technology will be challenging to perfect. Despite these concerns, investors overwhelmingly voted in favor of his record-breaking $56 billion compensation package at the annual shareholder meeting held last month.

Barclays analyst Dan Levy forecasted an 11% decline in second-quarter deliveries, which would be Tesla’s largest decline to date. He cautioned that a disappointing delivery result could redirect focus to the current challenging fundamental environment for Tesla”.

Tesla’s stock has experienced a significant decline in value this year, resulting in its position as one of the underperforming companies within the S&P 500 index. This performance stands in contrast to Mr. Musk’s earlier projection in April, where he expressed optimism regarding Tesla’s ability to achieve sales growth during the current year. In response to these challenges, cost-cutting measures have been implemented, including workforce reductions that have impacted the supercharging team.

OLD DESIGNS

It is anticipated by some analysts that the organization may experience its inaugural yearly sales decline during the current calendar year. Deliveries experienced their most significant decline in almost four years during the January-March timeframe, falling short of expectations established by Wall Street.

Tesla’s European sales experienced a significant decline of 36% in May. This downturn can be attributed to the reduction of EV subsidies and a decrease in demand from fleet operators, who contributed to almost half of the company’s sales in the region during the previous year.

In May, Reuters reported that Tesla was addressing concerns from European leasing companies. The companies were experiencing financial losses due to Tesla’s frequent price reductions, which diminished the value of their fleet. Additionally, Tesla’s slow service and costly repairs were causing dissatisfaction among corporate customers.

Tesla’s competitors in China have introduced lower-priced models, and Tesla has been relatively slow in introducing new designs to the market. In April, Musk announced that Tesla would launch “new models” later in the year, including affordable vehicles, but did not provide any specific pricing information.

Tesla recently updated its Model 3 sedan, albeit without significant design modifications. Notably, the popular Model Y SUV, Model S premium sedan, and Model X SUV have not undergone substantial changes in several years.

The organization commenced the distribution of its Cybertrucks towards the end of the previous year. However, Mr. Musk does not anticipate the commencement of mass production of the vehicle until 2025. The pickup has been subject to numerous recalls and quality-related concerns.

In May, Tesla omitted its objective of delivering 20 million vehicles annually by 2030 in its most recent impact report. This represents a significant shift from the company’s previous long-term annual growth target of 50% for EV deliveries, which had been widely publicized for several years.

Tesla intends to reveal its robotaxis on August 8^th, aiming to accelerate the adoption of its “Full Self-Driving” software. However, the commencement of production and the projected quantity remain uncertain.

 

July 02, 2024