Tesla on Wednesday reported smaller-than-expected third-quarter delivery growth as incentives and financing deals failed to attract enough customers for its aging electric vehicles, sending shares down more than 6%. It fell.
That puts EV manufacturers, already grappling with increased competition and slowing EV demand, at risk of seeing their annual shipments decline for the first time after years of rapid growth.
The world’s most valuable automaker’s stock price was on track to wipe out all of its gains so far this year by the close of trading Wednesday. The stock price has risen in recent weeks as investors look forward to an October 10 event in Los Angeles where Tesla is expected to unveil a robotaxi product as it shifts focus to AI-powered self-driving technology. It was rising.
Tesla has lowered prices and expanded incentives such as insurance offers and interest-free financing, especially in China, where it accounts for a third of its sales.
This contributed to an increase in sales in China in July and August, according to data from the China Passenger Car Association. Analysts believe China’s strong performance continued in September, but demand in the US and Europe was weak. “We believe China’s relative strength this quarter was offset by weakness in the U.S. and Europe,” Wedbush Securities analyst Dan Ives said in a note.
Tesla delivered 462,890 vehicles in the July-September period, up 6.4% year-on-year and marking its first quarterly increase after two consecutive quarters of sales declines. However, it fell short of the 469,828 average estimate of 12 analysts surveyed by LSEG.
Chief Executive Officer Elon Musk said he expects the company to deliver more than 1.8 million vehicles in 2024, up from last year’s record 1.8 million deliveries, but Wednesday’s numbers suggest that will be “very difficult.” ” said Sandeep Rao, senior research fellow at investment management firm Leverage Shares. A company with about $1 billion in assets that includes Tesla and other EV makers.
Tesla currently needs to deliver a record 516,344 vehicles in the fourth quarter to avoid a sales decline in 2024.
“Without providing customers with new cars, there’s only so much Tesla can do with discounts and incentives,” Rao said, adding that rivals, especially in China, are launching a variety of new models.
Price cuts and incentives are also weighing on the company’s profit margins, and investors and analysts say the fallout could be detrimental in the long term.
Some analysts said the return to growth is a positive sign for Tesla and shows that some of the incentives it has rolled out to boost demand are working.
“Taking a step back, the most important takeaway from today’s numbers was a return to growth in shipments,” said Matt Blitzman, senior equity analyst at Hargreaves Lansdown, which owns Tesla shares.
Tesla delivered 439,975 Model 3s and Model Ys, and 22,915 other models, including the Model S sedan, Cybertruck and Model X premium SUV.
Production volume from July to September was 469,796 units.
Deliveries exceeded rival BYD, which delivered 443,426 battery electric vehicles in the third quarter.