Tesla shares have soared 109% this year. In the coming days, one number will be much more important to investors: How many cars did the company deliver in the latest quarter?
The world’s biggest electric-vehicle maker slashed prices across the model lineup to defend its market position against competitors trying to lure away customers with newer models. Likely this weekend, Tesla will give a glimpse of how well its strategy is working.
Analysts anticipate the Elon Musk-led manufacturer to report sales of around 448,350 cars during the last three months, up 6% from the first quarter of the year. While Tesla will retain the top spot for global battery-electric vehicle deliveries, the company will need to pick up the pace slightly to sell through the 1.8 million to 2 million vehicles it’s planning to produce this year.
Tesla made and delivered more than 1.3 million cars worldwide last year and remains the dominant EV maker in the US. But in China — its No. 2 market — the company has fallen well behind BYD Co., which has a much fresher lineup and increasingly global ambitions. The ascent of the Berkshire Hathaway-backed manufacturer has drawn the attention of Musk, who tweeted last month about a Bloomberg TV clip showing him laughing dismissively about BYD’s vehicles in 2011.
“That was many years ago,” Musk wrote. “Their cars are highly competitive these days.”
Tesla’s discounting dates back to late last year, when inflation and rising interest rates started to weigh on consumers. The company slashed prices first in China, then in the US and Europe.
While Tesla has repeatedly tweaked what it’s charged since then, in some cases bumping prices back up, its vehicles are much cheaper than they were at the beginning of the year. The best-selling Model Y now starts at $47,740 in the US, down from $65,990 in early January.
Tesla is a major beneficiary of the Inflation Reduction Act, with each version of its high-volume vehicles — the Model 3 sedan and Model Y SUV — now eligible for the full $7,500 federal tax credit. Even after that perk started applying to all iterations of the Model 3 early this month, the company threw in three months of free fast-charging in the US to help clear inventory cars.
That incentive suggested Tesla still had work to do toward the end of the quarter to move cars off its lots. The Austin-based company has manufactured more vehicles than it’s delivered since it opened new plants outside Berlin and in Texas early last year.
Production probably outpaced deliveries again in the second quarter, UBS analyst Patrick Hummel wrote in a report Thursday.
Some analysts expect more markdowns to come.
“We still see risk of additional price cuts over the rest of the year and into 2024,” Emmanuel Rosner of Deutsche Bank wrote in a June 26 report. He expects the company to deliver 1.78 million vehicles this year.
Concern about Tesla’s deliveries failing to keep pace with production gave way in recent weeks to optimism about the company cashing in on its dominant US charging network. Since Ford Motor Co. became the first of five automakers to adopt the company’s plug and port in exchange for access to Supercharger stations, Tesla’s shares have soared 40%.
That run has prompted at least four analysts to downgrade the stock.
“The underlying near-term fundamentals of TSLA have at best remained unchanged,” Barclays analyst Dan Levy wrote June 21. “We believe that further negative revisions to 2024 consensus estimates are needed.”