Tesla’s global sales fell for a second straight quarter despite price cuts and low-interest financing offers, another sign of weakening demand for the company’s products and electric vehicles in general.
The Austin, Texas-based company said Tuesday it sold 436,956 vehicles in April through June, down 4.8 percent from the 466,140 it sold in the same period a year earlier. Sales were better than the 436,000 expected by analysts.
Demand for electric vehicles around the world is slowing, but most automakers are still growing. Tesla, with an aging model lineup and relatively high average selling prices, has struggled more than other manufacturers.
Still, it retained the title of the world’s largest electric vehicle maker. During the first half of the year, Tesla sold more than 910,000 vehicles worldwide, comfortably outpacing China’s BYD, which sold 726,153.
Tesla also sold 33,000 more vehicles during the second quarter than it produced, which should reduce the company’s available inventory in its stores.
Tesla did not give any explanation for the sales decline. The company will release its second-quarter results on July 23. The electric carmaker’s sales decline comes at a time of increased competition from traditional and start-up automakers, which are trying to chip away at the company’s market share. Most other automakers will report U.S. sales figures later on Tuesday.
Nearly all of Tesla’s sales came from the smaller, less expensive Model 3 and Model Y, with the company selling just 21,551 of its most expensive models, which include the X and S, plus the new Cybertruck.
The sales decline came despite Tesla cutting prices on three of its five models in the U.S. by $2,000 in April. The company slashed prices on the Model Y, Tesla’s most popular model and the best-selling electric vehicle in the U.S., as well as the Models X and S. Also during the quarter, Tesla cut about a third of the price of its “full self-driving” system, which can’t drive itself and so drivers must remain alert and ready to intervene.
Jessica Caldwell, director of insights at Edmunds.com, said Tesla is struggling in a market where most early adopters already own electric vehicles and mainstream buyers are more skeptical that electric cars can meet their needs.
Tesla also has a number of unique issues, most notably a model lineup that doesn’t look much different than it did years ago, Caldwell said. With Tesla’s price cuts, used-vehicle prices plummeted. Anyone who wants a Tesla can get a much better deal by buying a used one, Caldwell said. “If you’re thinking about monthly payments, it’s hard to compete with it,” he said.
Caldwell doesn’t see any big catalyst this year to boost Tesla sales unless gas prices soar. The new Cybertruck is selling only in small numbers and the rest of the lineup is older. “Most people would have a hard time determining which is the newest and which is the oldest,” he said.
Wedbush analyst Dan Ives wrote in a note to investors Tuesday that second-quarter sales were a “huge recovery” for Tesla. “Simply put, the worst is behind us for Tesla,” he wrote. The company, he wrote, cut 10% to 15% of its workforce to reduce costs and preserve profitability. “It now appears that better days are ahead as the growth story returns,” Ives wrote.
In its January letter to investors, Tesla predicted “notably lower” sales growth this year. Tesla shares had fallen more than 40% at the start of the year.