Tesla’s second-quarter sales rose 10 percent better than expected as the company, led by Elon Musk, took advantage of government stimulus and price cuts that made its electric cars cheaper than comparable gasoline models.
Tesla delivered 466,000 vehicles from April to June, up from 423,000 vehicles in the previous quarter, the company said Sunday. Year-over-year sales increased 83 percent in the second quarter as the company expanded production at new plants in Austin, Texas and near Berlin.
The sales figures beat Wall Street analysts’ estimates and showed that Tesla was able to overcome the effect of higher interest rates, which increase monthly payments for people buying cars on credit.
Tesla was the first of the automakers to report its sales figures. Sales of most major car brands likely rose sharply in the last quarter, analysts say. Supply chain issues have improved, making it easier for automakers to get the parts they need and for buyers to find the cars they want. Analysts at Cox Automotive predict new vehicle sales in the U.S. will rise more than 8 percent this year from 2022.
Rules that went into effect this year allowed buyers of Tesla vehicles to qualify for $7,500 in federal tax credits. With credit, the least expensive Model 3 sedan sells for less than $33,000, cheaper than comparable luxury sedans sold by Mercedes-Benz and BMW that run on gasoline and are in line with mass-market cars like the Toyota Camry and Honda Accord.
Owners of electric cars also benefit from fuel savings and lower maintenance costs. Electric vehicles do not require oil changes and electricity is generally cheaper per mile than gasoline.
Tesla is the dominant electric car maker in the United States, with a market share of 62 percent in the first quarter, according to Kelley Blue Book. But the share has dropped from more than 70 percent in early 2022 as established automakers like General Motors, Ford Motor and Volkswagen have started offering more electric models.
In China, a larger car market than the United States or Europe, Tesla faces fierce competition from local manufacturers who have newer models, such as BYD. Electric vehicles from Chinese manufacturers spend an average of just over a year in showrooms, according to consulting firm AlixPartners. Tesla’s most popular car, the Model Y SUV, went on sale in 2020.
Chinese manufacturers also offer interior and exterior styling and entertainment and information systems that better suit local tastes, AlixPartners noted, citing consumer surveys.
While Tesla’s sales have continued to rise, the company’s profitability has suffered as it has had to lower prices to support demand. Tesla made $2.5 billion in the first quarter, down from $3.7 billion in the last three months of 2022.
Many investors are betting that Tesla’s growth will accelerate as demand for electric vehicles grows, and the company will begin selling the Cybertruck, an electric pickup, later this year. Tesla’s agreement to let other automakers, including Ford and GM, use its charging network could also become a new source of revenue.
Tesla’s share price has more than doubled this year, though it remains well below its 2021 peak, when the company was worth more than $1 trillion.
The automaker said on Sunday it would publish its financial results for the second quarter of this year on July 19.