According to Reuters, Tesla's deliveries in the second quarter may drop by 3.7%, marking the first time the electric vehicle manufacturer has experienced two consecutive quarters of decline. This situation is mainly due to intense competition in China and a slowdown in demand due to the lack of new, affordable models.
Based on an average estimate from 12 analysts polled by the London Stock Exchange Group (LSEG), Tesla is expected to deliver 438,019 vehicles between April and June. Notably, seven analysts have lowered their expectations in the past three months. Tesla is expected to announce its second-quarter delivery results on July 2.
After years of rapid growth, becoming the world's leading electric vehicle manufacturer, Tesla has encountered some challenges. In January of this year, Tesla stated that the growth in deliveries for 2024 would "significantly slow down" as the boost from months of price cuts fades.
In addition to the aforementioned challenges, consumers' shift towards more affordable hybrid vehicles has led to an increase in Tesla's inventory. To stimulate sales, Tesla has had to resort to price cuts and offer incentives, including cheaper financing options and leasing schemes.
Earlier this year, Tesla CEO Elon Musk decided to pause the production of a more affordable new electric vehicle and shifted Tesla's focus to autonomous taxis. This shift has raised concerns among some investors, who worry about the difficulty of perfecting autonomous driving technology. However, at Tesla's annual shareholder meeting last month, investors overwhelmingly voted to approve Musk's record $56 billion compensation package.
According to Barclays analyst Dan Levy, Tesla's second-quarter deliveries could see an 11% decline, which would be the largest drop in Tesla's history. He further noted that weak delivery results might once again highlight the fundamental challenges Tesla currently faces.
Despite Elon Musk's April prediction that Tesla could increase sales this year, Tesla's stock price has fallen by a quarter so far this year, making it one of the worst-performing stocks in the S&P 500 index. To cut costs, Musk has implemented a series of measures, including large-scale layoffs, which have even affected Tesla's Supercharger project team.
Some analysts expect Tesla to experience its first-ever annual sales decline this year. In the first quarter (January to March) of this year, Tesla's deliveries saw their largest drop in nearly four years and missed Wall Street's expectations.
Tesla's sales performance in Europe has been particularly weak, with a 36% drop in May alone, mainly due to reduced electric vehicle subsidies and low demand from fleet operators. Fleet operators, a significant customer base for Tesla in Europe, accounted for nearly half of Tesla's sales in the region last year.
According to a Reuters report in May, Tesla has been working to appease some European leasing companies, as multiple retail price cuts have significantly reduced the value of their fleets. Additionally, slow service speed and high repair costs have left corporate customers dissatisfied.
In the Chinese market, competitors are continuously introducing more affordable models, while Tesla has been relatively slow in launching new designs. In April, Elon Musk stated that Tesla would introduce "new models" later this year, including more budget-friendly options, but did not disclose specific pricing details.
At the end of last year, Tesla updated its Model 3 sedan but did not make significant design changes. Meanwhile, the company's best-selling Model Y SUV, high-end Model S sedan, and Model X SUV have not undergone significant changes in recent years.
Tesla began delivering its Cybertruck electric pickup at the end of last year, but Elon Musk expects the model to achieve mass production only by 2025. Since the start of deliveries, the Cybertruck has faced numerous recalls and quality issues.
In its latest impact report released in May, Tesla did not mention its previous goal of delivering 20 million electric vehicles annually by 2030, marking a significant shift, as Tesla has long touted its long-term goal of 50% annual growth in electric vehicle deliveries.
Tesla plans to officially launch autonomous taxis on August 8, 2024, aiming to further promote its Full Self-Driving (FSD) software. However, detailed information on production timelines and capacity plans still awaits further announcements from Tesla.
