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Tesla Stock Rises 9% Despite Decline in Vehicle Deliveries

Quiver Editor

Tesla's (TSLA) vehicle sales slid for a second straight quarter but not as much as expected, lifting the company’s stock price and keeping Tesla ahead of rival BYD as the world’s largest seller of electric vehicles. The company said it delivered 443,956 vehicles globally in the three-month period, a 4.8% decline from the same quarter a year ago. The decline comes as Tesla contends with lukewarm demand for its cars and intensifying competition. The better-than-expected results boosted Tesla’s stock price by 9% in morning trading. Before the news, Tesla’s share price had declined 16% this year.

Chief Executive Elon Musk is facing his greatest test in years as he tries to juggle the need to spend money on developing new and more affordable models while investing in pricey bets on robots and self-driving technology. A bellwether for the electric-vehicle industry, Tesla’s second-quarter sales figures were closely watched by analysts for indications that the company could return to growth after a dismal first three months to the year. Tesla reported its first year-over-year decline in global deliveries since 2020 in the first quarter, which it partly attributed to production halts. Tesla’s fleet of vehicles is aging, with its most popular vehicle, the Model Y SUV, approaching five-years-old—a time when traditional car companies usually make major design changes to boost demand. The company is ramping up production of an updated Model 3 sedan and its newest model, the hulking Cybertruck, which costs $61,000 to $100,000.

Market Overview:
  • Second-quarter vehicle deliveries down 4.8% year-over-year
  • Stock price up 9% despite overall decline in sales
  • Production volume fell 14% year-over-year
Key Points:
  • Struggling with competition and demand in China
  • Reduced operating margins from 16.8% in 2022 to 5.5%
  • Plans to ramp up production of Model 3 and Cybertruck
Looking Ahead:
  • Investments in robotics and AI to boost market value
  • Introduction of more affordable Tesla models
  • Continued leadership in U.S. EV market despite shrinking lead

As sales continued to shrink, Tesla’s manufacturing volume fell sharply in the second quarter. The company produced 410,831 vehicles during the period, a 14% reduction from the prior year. Tesla faces some of its toughest competition in China, where the company’s sales have declined as competitors roll out lower-priced EV models. In June, Tesla’s sales in China dropped 24% compared with last year, while the broader market reported a bump in deliveries amid a rush of discounts and government subsidies. Rival BYD posted sales of 426,039 EVs in the second quarter, a 21% increase over the same period last year.

Musk has been lowering prices for Tesla’s vehicles as other major automakers release many rival offerings. But the cuts also mean lower profits, and Tesla’s once industry-beating operating margins were 5.5% in the first quarter of this year, down from 16.8% in 2022. In an effort to shore up profits, Musk is cutting costs and has said he would lay off more than 10% of the company’s global staff. Amid the turmoil, Musk has lost some longtime lieutenants, including former finance chief Zach Kirkhorn and Drew Baglino, who oversaw much of the company’s work on batteries. Musk has sought to rally waning investor enthusiasm behind the company’s bets on robotics and artificial intelligence, technologies he claimed at Tesla’s annual shareholder meeting in June could boost Tesla’s market value by as much as $30 trillion.

About the Author

David Love is an editor at Quiver Quantitative, with a focus on global markets and breaking news. Prior to joining Quiver, David was the CEO of Winter Haven Capital.

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