In a surprising turn of events, Tesla’s June-quarter deliveries are expected to decline by 3.7%, marking the first time the top electric vehicle (EV) maker faces two consecutive quarters of falling deliveries. The company is projected to deliver approximately 438,019 vehicles for the April to June period, based on estimates from 12 analysts polled by LSEG. Seven of these analysts have recently revised their expectations downward, reflecting the challenges Tesla is currently navigating.
The Challenges Ahead
Stiff Competition in China
Tesla’s growth trajectory has hit a speed bump, despite years of rapid expansion that made it the world’s most valuable automaker. In China, where the EV market is fiercely competitive, Tesla faces headwinds due to local rivals rolling out more affordable models. The company’s struggle to maintain market share in this crucial region has contributed to the decline in deliveries.
Slow Demand and Lack of Affordable Models
Another factor impacting Tesla’s performance is sluggish demand. The absence of new, affordable models has left the company with a growing inventory of vehicles. To move these units, Tesla has resorted to price cuts and incentives, including more accessible financing options and leasing programs. However, the consumer shift toward cheaper gasoline-electric hybrid vehicles has complicated matters.
Robotaxis and Autonomous Technology
Earlier this year, CEO Elon Musk shifted Tesla’s focus from creating an all-new, cheaper electric car to developing robotaxis. While this move reflects Musk’s vision for the future of transportation, some investors remain concerned about the feasibility of perfecting autonomous technology. Despite these challenges, shareholders overwhelmingly approved Musk’s record $56 billion pay package at the annual meeting last month.
The Road Ahead
Barclays analyst Dan Levy predicts an 11% drop in second-quarter deliveries, which would be Tesla’s largest decline to date. The stock has already lost a quarter of its value this year, making it one of the worst performers on the S&P 500. Musk’s earlier forecast of increased sales in 2024 now faces scrutiny as the company grapples with fundamental challenges.
As Tesla navigates these headwinds, it remains to be seen whether the company can regain its momentum. Investors and industry observers eagerly await the official delivery numbers, which will shed light on Tesla’s path forward.
