DETROIT — Tesla’s global sales fell for the second quarter, despite price cuts and low-interest financing offers, another sign of weak demand for the company’s products and electric vehicles overall.
The Austin, Texas-based company on Tuesday said it sold 443,956 vehicles from April to June, down 4.8% from the 466,140 it sold in the same period a year ago. But sales were better than the 436,000 that analysts had expected.
The better-than-expected delivery sent Tesla shares up more than 9% in midday trading Tuesday. The stock is down about 8% so far this year, but has nearly erased its larger losses from the previous month. Tesla shares have fallen more than 40% at the start of the year, but are up more than 60% since hitting a 52-week high in April.
Demand for EVs around the world is slowing, but it’s still too much for most automakers. Tesla, with its aging model lineup and relatively high average selling price, has struggled more than other manufacturers. But it still holds the title of the world’s best-selling electric vehicle manufacturer.
For the first half of the year, Tesla sold more than 910,000 vehicles worldwide, easily beating 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 inventory in stores.
Tesla’s sales decline is due to increased competition from older car manufacturers and startups, which are trying to chip away at the company’s market share. Most other automakers will report U.S. sales figures later Tuesday.
Tesla did not offer an explanation for the sales decline, which is a sign of what to expect when it posts second-quarter earnings on July 23.
Nearly all of Tesla’s sales came from the smaller, cheaper Model 3 and Y, with the company only selling 21,551 of the more expensive models including the X and S, as well as the new Cybertruck.
The sales decline comes despite Tesla removing a $2,000 price cut from three out of five models in the United States in April. The company is cutting the price of the Model Y, Tesla’s most popular model and the best-selling electric vehicle in the US, as well as the Model X and S.
The April cut reduced the starting price for the Model Y to $42,990 and to $72,990 for the Model S and $77,990 for the Model X.
Additionally, Tesla in May offered 0.99% financing for up to six years on the Model Y. In June, it offered up to 1.99% interest for three years on the rear-wheel drive Model 3. the average is just over 7%, according to Edmunds.com.
Also during the quarter, Tesla reduced by about a third the price of the “Full Self Driving” system – which cannot drive itself and the driver must remain alert and ready to intervene – to $8,000 from $12,000, according to the company’s website. .
Jessica Caldwell, head of insights for Edmunds.com, said Tesla is struggling in a market where most early adopters already own EVs, and mainstream buyers are more skeptical that electric cars can meet demand.
Tesla’s “reckless” price cuts aren’t working as well as they used to because consumers now expect them, he said. “We have seen cars exhaust bags of tricks by lowering prices and increasing incentives to spur demand without much success in the US market,” Caldwell said.
Also, Tesla’s aging model lineup doesn’t look that different from last year, he said. And with the price cuts, used Tesla prices plummeted. Anyone who wants a Tesla can get a better deal for buying a used one, Caldwell said.
Caldwell doesn’t see a big catalyst this year that will boost Tesla sales unless gas prices rise, and he says Musk’s shift to the right since taking over Twitter has hurt the brand’s image.
Wedbush analyst Dan Ives wrote in a note to investors Tuesday that second-quarter sales were a “great return performance” for Tesla. “In short, the worst is in the rearview mirror for Tesla,” he wrote. The company, he wrote, is cutting 10% to 15% of its workforce to cut costs and maintain profitability. “It looks like better days are ahead now as the story grows again,” Ives wrote.
In a letter to investors in January, Tesla predicted “lower” sales growth this year. The letter says Tesla is in the middle of two big growth waves, one from the global expansion of the Model 3 and Y, and the second from the Model 2, a new smaller and cheaper vehicle with an unknown release date.
Tesla is scheduled to unveil its purpose-built robotaxi at an event on August 8.
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This story has been corrected to correct Tesla’s second quarter sales numbers. The company sold 443,956 vehicles from April to June.