Please ensure Javascript is enabled for purposes of website accessibility
Tesla Sales Jump 83% From a Year Ago on Price Cuts, Tax Credits
By admin
Published 12 months ago on
July 3, 2023

Share

Getting your Trinity Audio player ready...

DETROIT — Tesla’s second-quarter deliveries rose 83% from a year ago after the company cut prices several times on its four electric vehicle models and buyers took advantage of U.S. government tax credits.

The Austin, Texas, producer of EV, solar panels and batteries said Sunday that it sold a record 466,140 vehicles worldwide from April through June, nearly doubling the 254,695 it sold during the same period a year earlier. The vast majority of the sales were Tesla’s popular Model 3 and Model Y versions.

But the price cuts, both for special orders and on existing inventory, raised questions from analysts who expect the cuts to reduce Tesla’s profit margins when it announces second-quarter earnings on July 19.

Tesla’s sales were better than Wall Street expectations. Analysts polled by data provider FactSet expected deliveries of 445,000 for the quarter.

Tesla’s Production Outpaced Sales

The company produced 479,700 vehicles from April through June, about 13,000 more than it sold, indicating that inventories may be building.

The second-quarter sales bring Tesla to nearly 900,000 vehicles for the first half of this year. The company sold 422,875 vehicles from January through March.

CEO Elon Musk has predicted that sales will grow about 50% per year for the near future. To reach that number for the full year, the company would have to sell 1.97 million vehicles. Analysts expect Tesla to fall a little short, delivering 1.82 million vehicles for the year.

Tesla cut U.S. prices at least four times during the quarter for vehicles ordered by customers. Larger price drops emerged on store inventory toward the end of the quarter in mid-June. The company trimmed prices on some Model 3 cars by more than $3,000. Model X SUV price cuts reached over $10,000, and the company threw in three years of free charging for the S and X. The Model S sedan saw cuts of about $7,500.

Prices even were reduced on the inventory of the Model Y small-SUV, Tesla’s top seller, by as much as $1,570 in a late June push to move vehicles.

Impact of Tax Credits on Tesla’s Sales

Sales were almost certainly boosted by a $7,500 U.S. government tax credit from the Inflation Reduction Act that was available on nearly all Tesla models during the second quarter.

Wedbush Analyst Dan Ives said price cuts in boosted sales, especially in China, but there will be a price to pay in reduced profit margins. He expects Tesla’s margins to hit bottom during the next two quarters, recovering to normal levels next year.

“We’re going to likely see the price cuts have weighed on margins,” Morningstar analyst Seth Goldstein said.

Tesla’s automotive gross profit margin (excluding regulatory credit revenue), the company’s gross profit compared to revenue, was as high as 30% early last year. But as interest rates rose, Tesla began cutting prices last year, and the margin fell to 19% in the first quarter. Analysts expect 16.9% from April through June, according to FactSet.

Growing U.S. Inventory and Future Challenges

Ives said Tesla’s U.S. inventory is starting to grow. “That’s going to be a bit of an overhang going into the second half of the year,” he said.

Deliveries, he said, aren’t the whole Tesla story. With General Motors, Ford, Rivian and Volvo announcing that they’ll join Tesla’s charging network and start using its plug, Tesla will get millions in charging revenue.

“I do believe investors are starting to appreciate the sum of the parts story,” Ives said.

Shares of Tesla have more than doubled in value this year, largely on news that General Motors and Ford are joining the company’s charging network. Tesla shares closed Friday at $261.77.

Goldstein expects that Tesla to ramp up production at new factories in Austin, Texas, and in Germany, further reducing the company’s fixed costs. “I think we’re likely looking at the bottom in the first half of this year, and then margins will slightly recover from there,” he said.

RELATED TOPICS:

DON'T MISS

Watch: Saudi Crown Prince Demands Netanyahu Face Criminal Charges for Gaza

DON'T MISS

Mehdi Hasan Debates Zionism in Heated Live Event

DON'T MISS

Happ, Swanson Homers as Chicago Cubs Battle SF Giants

DON'T MISS

Luxury Portable Bathrooms? Fresno Co. Lets You to Do Your Business in Opulence

DON'T MISS

Tropical Storm Alberto Forms in Southwest Gulf, 1st Named Storm of the Hurricane Season

DON'T MISS

Images Reveal Extensive Destruction in Lebanese Villages

DON'T MISS

Rifts Seem to Appear Between Israel’s Political and Military Leadership Over Conduct of the Gaza War

DON'T MISS

Anarchy Hinders Gaza Aid Efforts, Despite Daily Combat Pause

DON'T MISS

Trump Tries to Set Expectations, and Floats Excuses, for His Debate With Biden

DON'T MISS

Parlier Political Wars Update: Did the Council Fire the City Attorney, or Not?

UP NEXT

Happ, Swanson Homers as Chicago Cubs Battle SF Giants

UP NEXT

Luxury Portable Bathrooms? Fresno Co. Lets You to Do Your Business in Opulence

UP NEXT

Images Reveal Extensive Destruction in Lebanese Villages

UP NEXT

Rifts Seem to Appear Between Israel’s Political and Military Leadership Over Conduct of the Gaza War

UP NEXT

Anarchy Hinders Gaza Aid Efforts, Despite Daily Combat Pause

UP NEXT

Trump Tries to Set Expectations, and Floats Excuses, for His Debate With Biden

UP NEXT

Parlier Political Wars Update: Did the Council Fire the City Attorney, or Not?

UP NEXT

Wired Wednesday: Fresno to Decide on 114% Trash Rate Hikes

UP NEXT

UN Commissioner Calls Israeli Army ‘One of the Most Criminal in the World’

UP NEXT

Iran’s Nuclear Expansion Raises Global Concerns, Condemnation

Luxury Portable Bathrooms? Fresno Co. Lets You to Do Your Business in Opulence

6 hours ago

Tropical Storm Alberto Forms in Southwest Gulf, 1st Named Storm of the Hurricane Season

7 hours ago

Images Reveal Extensive Destruction in Lebanese Villages

7 hours ago

Rifts Seem to Appear Between Israel’s Political and Military Leadership Over Conduct of the Gaza War

7 hours ago

Anarchy Hinders Gaza Aid Efforts, Despite Daily Combat Pause

7 hours ago

Trump Tries to Set Expectations, and Floats Excuses, for His Debate With Biden

7 hours ago

Parlier Political Wars Update: Did the Council Fire the City Attorney, or Not?

7 hours ago

Wired Wednesday: Fresno to Decide on 114% Trash Rate Hikes

9 hours ago

UN Commissioner Calls Israeli Army ‘One of the Most Criminal in the World’

10 hours ago

Iran’s Nuclear Expansion Raises Global Concerns, Condemnation

10 hours ago

Watch: Saudi Crown Prince Demands Netanyahu Face Criminal Charges for Gaza

In a recent video released by Arab News, Saudi Arabia’s Crown Prince Mohammed bin Salman has called for Israeli Prime Minister Benjami...

5 hours ago

5 hours ago

Watch: Saudi Crown Prince Demands Netanyahu Face Criminal Charges for Gaza

5 hours ago

Mehdi Hasan Debates Zionism in Heated Live Event

5 hours ago

Happ, Swanson Homers as Chicago Cubs Battle SF Giants

6 hours ago

Luxury Portable Bathrooms? Fresno Co. Lets You to Do Your Business in Opulence

7 hours ago

Tropical Storm Alberto Forms in Southwest Gulf, 1st Named Storm of the Hurricane Season

7 hours ago

Images Reveal Extensive Destruction in Lebanese Villages

7 hours ago

Rifts Seem to Appear Between Israel’s Political and Military Leadership Over Conduct of the Gaza War

7 hours ago

Anarchy Hinders Gaza Aid Efforts, Despite Daily Combat Pause

MENU

CONNECT WITH US

Search

Send this to a friend