April 22, 2024

Tesla’s sales rose a better-than-expected 10% in the second quarter as the Elon Musk-led company benefited from government incentives and price cuts that made its electric vehicles cheaper than comparable gasoline-powered models.

Tesla said on Sunday it delivered 466,000 vehicles between April and June, up from 423,000 vehicles in the previous quarter. Sales rose 83% in the second quarter compared with a year earlier as the company ramped up production at new plants in Austin, Texas, and near Berlin.

The sales figures beat Wall Street analysts’ expectations and suggested Tesla could overcome rising interest rates, which lead to higher monthly payments for people who buy cars on credit.

Tesla is the first automaker to release its sales figures. Sales of most major auto brands likely rose sharply in the last quarter, analysts said. 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. Cox Automotive analysts predict U.S. new vehicle sales will grow more than 8% this year, starting in 2022.

The rules, which took effect this year, allow buyers of Tesla vehicles to qualify for a $7,500 federal tax credit. With the offer, the cheapest Model 3 sedan costs less than $33,000, cheaper than similar gas-powered luxury sedans sold by Mercedes-Benz and BMW, and in line with mass-market vehicles like the Toyota Camry and Honda Accord.

Owners of EVs also benefit from fuel savings and reduced maintenance costs. Electric cars don’t require oil changes, and electricity is often cheaper per mile than gasoline.

Tesla is the leading maker of electric vehicles in the U.S., with a 62% market share in the first quarter, according to Kelley Blue Book. But its share has slipped from more than 70% in early 2022 as established automakers such as General Motors, Ford and Volkswagen begin offering more electrified models.

In China, an auto market larger than the U.S. or Europe, Tesla faces stiff competition from local manufacturers such as BYD with updated model lineups. On average, electric cars from Chinese manufacturers sit in showrooms for more than a year, according to consultancy AlixPartners. Tesla’s most popular car, the Model Y sport utility vehicle, arrives in 2020.

AlixPartners, citing consumer surveys, noted that Chinese manufacturers also offer interior and exterior styling, as well as entertainment and information systems that are more in line with local tastes.

While Tesla’s sales continued to climb, the company’s profitability suffered as it had to cut prices to support demand. Tesla earned $2.5 billion in the first quarter, down from $3.7 billion in the final 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 its Cybertruck electric pickup later this year. Tesla’s agreement to let other automakers such as Ford and General Motors use its charging network could also be a new revenue stream.

Tesla’s shares have more than doubled this year, though still well below the 2021 peak when the company’s market value will exceed $1 trillion.

The automaker said on Sunday it will report financial results for the second quarter of the year on July 19.

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