Tesla's second-quarter deliveries rose 83 percent year-over-year as the company repeatedly cut prices for four of its electric vehicles and buyers took advantage of U.S. government tax credits. The Austin, Texas-based producer of electric vehicles, solar panels and batteries said on Sunday that it sold a record 466,140 vehicles worldwide from April to June, nearly double the 254,695 in the same period last year. The vast majority of sales came from Tesla's popular Model 3 and Model Y versions.
However, the price cuts have raised concerns among analysts, who expect these cuts to reduce Tesla's profit margins in the second-quarter results report released on July 19. Still, Tesla's sales numbers beat Wall Street expectations. Analysts at data provider FactSet expect 445,000 deliveries in the quarter.
From April to June, Tesla produced a total of 479,700 vehicles, about 13,000 more than it sold, which means inventory may be accumulating. In the first half of this year, Tesla's total sales were close to 900,000 vehicles. The company sold 422,875 vehicles between January and March. CEO Elon Musk predicts that sales will grow by about 50% annually in the near term, and to achieve this goal for the full year, the company needs to sell 1.97 million vehicles. Analysts expect Tesla to be slightly behind, with 1.82 million full-year deliveries.
Tesla cut prices at least four times in the second quarter, with price cuts for vehicles customized for customers and existing inventory. Tesla has cut the price of some Model 3 cars by more than $3,000. The Model X SUV has been cut by more than $10,000, and the company is offering three years of free charging for the Model S and X. The price of the Model S sedan was reduced by about $7,500. Even in a late-June sales boost, inventory prices for the Model Y small SUV were cut by up to $1,570.
Tesla's sales almost certainly benefited from a $7,500 tax credit from the U.S. government in the second quarter. Wedbush analyst Dan Ives said that the price cuts have boosted sales, especially in the Chinese market, but this will be achieved at the cost of lower profit margins. He expects Tesla's profit margins to bottom out in the next two quarters and return to normal levels next year.
It's worrying that Tesla's inventory is starting to grow. "It's going to be a little bit of a burden in the second half of the year," he said. He also noted that deliveries don't tell the whole story of Tesla. With General Motors, Ford, Rivian and Volvo announcing joining Tesla's charging network and starting to use their plug devices, Tesla will receive millions of dollars in charging revenue. Ives said: "I believe investors are starting to recognize this individual part of the gain. Tesla's stock has doubled this year, largely because of news that GM and Ford will join the company's charging network. Tesla's share price closed at $261.77 on Friday.