Global sales of Tesla Inc. showed a decline for the second consecutive quarter, which put the automaker in a difficult position from which it will have to extricate itself to avoid another year-on-year downturn, UNN reports with reference to Bloomberg.
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The company delivered 384,122 vehicles in the last three months, down 13% from a year earlier. Now Tesla has to overcome a deficit of almost 110,000 vehicles in the second half of the year to return to growth this year.
Sales still exceeded the most pessimistic analyst forecasts, with the most pessimistic predicting a drop of more than 20%. Tesla shares rose after the report was published, climbing 5.1% as of 9:15 a.m. Wednesday in New York, before the start of regular trading.
These figures contradict Elon Musk's statement in mid-May that Tesla's automotive business had recovered from a downturn earlier in the year, caused in part by a backlash against his work in the Trump administration. Sales, as indicated, could fall further by the end of this year if the US Congress passes President Donald Trump's multi-trillion dollar spending bill, which would eliminate tax breaks for electric vehicle purchases.
Tesla was counting on growth in the quarter from the updated Model Y SUV, certainly its most important product. But otherwise, the company's outdated model range is losing its luster compared to offerings from BYD Co. and Xiaomi Corp. in China, while General Motors Co. is gaining momentum in the US electric vehicle market.
In April, Tesla told investors that new cars, including more affordable models, would still be launched into production in the first half of the year. Cheaper new cars did not appear, leading some analysts to suggest that their release might be delayed.
Most analysts now expect Tesla to report a second consecutive annual decline in car sales. Analysts surveyed by Bloomberg, on average, predict that the company will deliver about 1.65 million cars in 2025, which is about 8% less than 1.79 million last year.
Tesla management had already abandoned its January forecast that the automotive business would return to growth this year, and in April, executives warned that they would revise their forecasts when reporting earnings this month.
Then, on May 20, Musk told Bloomberg News that Tesla's deliveries had recovered and that the company did not expect a significant shortage in the future.
"Currently, sales figures are high, and we do not see any problems with demand," the CEO said in an interview at the Qatar Economic Forum.
Musk diverted investors' attention from car sales until the end of the quarter by launching the long-promised self-driving taxi service. While Tesla offered rides only to a small contingent of fans in a limited area of Austin, Texas - and footage of several rides attracted the attention of federal safety regulators - Tesla shares rose 23% during the three-month period.
Now the CEO is taking more control over the company's automotive business after the resignation of a close confidant, Omead Afshar, who was responsible for Tesla's sales and manufacturing operations in North America and Europe.
As Bloomberg reported on Tuesday, citing sources familiar with the situation, Tesla's sales in the US and Europe will now report to Musk, while Tom Zhu, senior vice president, will continue to oversee sales in Asia and take over manufacturing operations worldwide.