Tesla sales fall for second straight quarter despite price cuts, but decline not as bad as expected

by the numbers

The Austin, Texas, company said Tuesday that it sold 443,956 vehicles from April through June, down 4.8 percent from 466,140 sold the same period a year ago. Photo courtesy of Tesla

Tesla's global sales fell for the second straight quarter despite price cuts and low-interest financing offers, another sign of weakening demand for the company's products and electric vehicles overall.

The Austin, Texas, company said Tuesday that it sold 443,956 vehicles from April through June, down 4.8 percent from 466,140 sold the same period a year ago. But the sales were better than the 436,000 that analysts had expected.

The better-than-expected deliveries pushed Tesla's stock up 10 percent Tuesday. The stock is down about 7 percent so far this year, but it has nearly erased larger losses from prior months. Tesla shares had been down more than 40 percent earlier in the year, but are up more than 60 percent since hitting a 52-week low in April.

Demand for EVs worldwide is slowing, but they're still growing for most automakers. Tesla, with an aging model lineup and relatively high average selling prices, has struggled more than other manufacturers. Still it retained the title of the world's top-selling electric vehicle maker.

For the first half of the year, Tesla sold 830,766 electric vehicles worldwide, handily beating China's BYD, which sold 726,153 EVs.

Tesla also sold over 33,000 more vehicles during the second quarter than it produced, which should reduce the company's inventory on hand at its stores.

Tesla's sales decline comes as competition is increasing from legacy and startup automakers, which are trying to nibble away at the company's market share. Most other automakers will report U.S. sales figures later Tuesday.

Tesla gave no explanation for the sales decline, which is a harbinger of what to expect when it posts second-quarter earnings on July 23.

Nearly all of Tesla’s sales came from the smaller and less-expensive Models 3 and Y, with the company selling only 21,551 of its more expensive models that include X and S, as well as the new Cybertruck.

The sales decline came despite Tesla knocking $2,000 off the prices of three of its five models in the United States in April. The company cut the prices of the Model Y, Tesla’s most popular model and the top-selling electric vehicle in the U.S., and also of the Models X and S.

The April cuts reduced the starting price for a Model Y to $42,990 and to $72,990 for a Model S and $77,990 for a Model X. Last week, Tesla lopped $2,340 off the $38,990 base price of some newly revamped Model 3s that were in the inventory shipped to its stores.

In addition, Tesla in May offered 0.99 percent financing for up to six years on the Model Y. In June, it offered interest as low as 1.99 percent for three years on the rear-wheel-drive Model 3. Typical new-vehicle interest rates average just over 7 percent, according to Edmunds.com.

Also during the quarter, Tesla knocked roughly a third off the price of its “Full Self Driving” system — which can’t drive itself and so drivers must remain alert and be ready to intervene — to $8,000 from $12,000, according to the company website.

Jessica Caldwell, head of insights for Edmunds.com, said Tesla is having trouble in a market where most early adopters already have EVs, and mainstream buyers are more skeptical that electric cars can meet their needs.

Tesla's “haphazard” price cuts don't work as well as they once did because consumers now expect them, she said. “We’ve seen the automaker exhaust its bag of tricks by lowering prices and increasing incentives to spur demand without much success in the U.S. market,” Caldwell said.

Also, Tesla's aging model lineup doesn’t look much different than it did years ago she said. And with price cuts, used Tesla prices tumbled. Anyone wanting a Tesla can get a far better deal buying a used one, Caldwell said.

Caldwell doesn’t see any big catalyst this year that would boost Tesla sales unless gasoline prices spike, and she said 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 “huge comeback performance” for Tesla. “In a nutshell, the worst is in the rearview mirror for Tesla,” he wrote. The company, he wrote, cut 10 percent to 15 percent of its workforce to reduce costs and preserve profitability. “It appears better days are now ahead as the growth story returns,” Ives wrote.

In its letter to investors in January, Tesla predicted “notably lower” sales growth this year. The letter said Tesla is between two big growth waves, one from global expansion of the Models 3 and Y, and a second coming from the Model 2, a new, smaller and less expensive vehicle with an unknown release date.

Tesla is scheduled to unveil a purpose built robotaxi at an event on Aug. 8.

From Your Site Articles

Sysco recently took delivery of 10 heavy-duty, electric-powered trucks for its Houston operations. Photo via LinkedIn

Sysco introduces new fleet of electric trucks at Houston operations

ev moves

Houston-based food distributor Sysco is helping fuel the future of electric vehicles.

Sysco recently took delivery of 10 heavy-duty, electric-powered trucks for its Houston operations. With this delivery, Sysco now operates nearly 120 electric vehicles (EVs) around the world.

In 2023, Sysco unveiled its first EV hub, which is in Riverside, California. The hub will eventually feature:

40 electric-powered refrigerated trailers
40 electric-powered semi-trucks
40 charging stations

The hub also will include 4 megawatt-hours of battery storage and 1.4 additional megawatts of solar power generation.

Aside from Houston and Riverside, Sysco uses EVs in Baltimore; Boston; Baltimore; Denver; Long Island, New York; Los Angeles; and Fremont, California. Its EV fleet extends to Canada, Sweden, and the United Kingdom.

Sysco announced in 2021 that it planned to operate nearly 800 electric-powered semi-trucks by 2026. Houston Freightliner is a partner in this initiative.

In all, Sysco aims to electrify 35 percent of its U.S. tractor fleet.

Around the world, EVs are contributing to Sysco’s goal of reducing direct emissions by 27.5 percent by 2030.

“We are proud of our progress to scale our electric truck fleet and continue our journey to meet our climate goal,” Neil Russell, chief administrative officer at Sysco, says in a news release. “This work is important to many of our customers who have also set goals to reduce emissions.”

It's the first time the company has used EVs in any of its upstream sites, including the Permian Basin. Photo via exxonmobil.com

ExxonMobil revs up EV pilot in Permian Basin

seeing green

ExxonMobil has upgraded its Permian Basin fleet of trucks with sustainability in mind.

The Houston-headquartered company announced a new pilot program last week, rolling out 10 new all-electric pickup trucks at its Cowboy Central Delivery Point in southeast New Mexico. It's the first time the company has used EVs in any of its upstream sites, including the Permian Basin.

“We expect these EV trucks will require less maintenance, which will help reduce cost, while also contributing to our plan to achieve net zero Scope 1 and 2 emissions in our Permian operations by 2030," Kartik Garg, ExxonMobil's New Mexico production manager, says in a news release.

ExxonMobil has already deployed EV trucks at its facilities in Baytown, Beaumont, and Baton Rouge, but the Permian Basin, which accounts for about half of ExxonMobil's total U.S. oil production, is a larger site. The company reports that "a typical vehicle there can log 30,000 miles a year."

The EV rollout comes after the company announced last year that it plans to be a major supplier of lithium for EV battery technology.

At the end of last year, ExxonMobil increased its financial commitment to implementing more sustainable solutions. The company reported that it is pursuing more than $20 billion of lower-emissions opportunities through 2027.

Cowboys and the EVs of the Permian Basin | ExxonMobilyoutu.be

A new list from EV Charger Reviews puts Texas in the No. 2 position among the worst states for owning an EV. Photo via Getty Images

Texas ranked as among the worst states for EV drivers

yikes

You’d think that producing tens of thousands of Teslas might help drive up Texas’ standing among the best states for owning an electric vehicle. To the contrary, Texas ranks among the worst states to be an EV owner.

A new list from EV Charger Reviews puts Texas in the No. 2 position among the worst states for owning an EV. Washington leads the pack of the worst EV states. Topping the list of the best states for EV owners is Maine, followed by Colorado and Vermont.

The ranking judged each state on these factors:

Number of registered EVs
Number of EVs per charging port
Ratio of one square mile per charging port
Cost of electricity
Annual cost savings for EV owners
Number of EVs per service center
EV tax credits

“Texas has cheaper electricity but a bad ratio of EVs registered to charging ports and service centers. The annual savings on gas money is only about $1,000, and there are no tax incentives,” says EV Charger Reviews.

Texas’ ranking stands in contrast to the presence in Austin of Tesla’s headquarters and a Tesla factory. The more than 10 million-square-foot, 25,000-acre factory serves as the U.S. manufacturing hub for Tesla’s electric-powered Model Y car and Cybertruck.

While thousands of Texans are driving Teslas and other EVs, they’re definitely in the minority.

Survey findings released in November 2023 by the University of Houston and Texas Southern University showed that only five percent of Texas motorists who were questioned drove an electric-powered car, truck, or SUV.

Nearly 60 percent of those who didn’t drive EVs said they wouldn’t consider buying one. Almost half (46 percent) cited the lack of charging stations as their chief reason for not wanting to own an EV.

“With such a small percentage of Texans currently owning electric vehicles, it looks like Texans will hold tight to their gas engines for the foreseeable future. Government incentives … have yet to make a difference among the state’s vehicle buyers,” according to a UH news release about the survey.

“But as charging stations grow in number, costs of operation decrease and — most important, the technology allows longer driving ranges — perhaps electric vehicles will start to earn their place in the garages of Texans.”

A Texas law that took effect in 2023 requires an EV owner to pay an extra $200 fee when they renew their vehicle registration or an extra $400 fee for their initial two-year registration.

While Houston isn't known as the coldest of climates, you still might want to review this myth-busting guest column. Photo via Pexels

Guest column: Cold weather and electric vehicles — separating fact from fiction

EVs in winter

Winter range loss is fueling this season’s heated debate around the viability of electric vehicles, but some important context is needed. Gasoline cars, just like their electric counterparts, lose a significant amount of range in cold weather too.

According to the Department of Energy, the average internal combustion engine’s fuel economy is 15 percent lower at 20° Fahrenheit than it would be at 77° Fahrenheit, and can drop as much as 24 percent for short drives.

As the world grapples with the implications of climate change and shifts toward sustainable technologies, it's important to put the pros and cons of EVs and traditional gas vehicles in perspective. And while Houston isn't known as the coldest of climates, you still might want to review this information.

The Semantics of Energy Consumption Hide the Real Issue: Cost

First, let's talk about the language. When discussing gas vehicles in cold climates, the conversation often centers around "fuel efficiency." It sounds less threatening, doesn't it? But in reality, this is just a euphemism for range loss, something for which EVs are frequently criticized.

Why does that matter? Because for most drivers who travel less than 40 miles a day, what range loss really means is higher fueling costs. When a gas vehicle loses range, it costs a lot more than the same range loss in an EV. For example, at $3.50 a gallon, a car that gets 30 MPG in warm weather and costs $46.67 to go 400 miles suddenly costs $8.24 more to drive the same distance. By contrast, an EV plugging in at $0.13 per kWh usually costs $13 to go 400 miles and bumps up to a piddly $16.25 even if it loses 20 percent efficiency when the temperature drops.

Some EV models lose 40 percent in extreme cold. OK, tack on another $3. That still leaves almost $30 in the driver’s pocket. Over the course of a year, those savings pile up.

Let’s Call It What It Is: Fear Mongering

Any seismic shift in technology comes with consumer hesitancy and media skepticism. Remember when everyone was afraid to stand in front of microwaves and thought the waves would make the food unsafe to eat? Or how, just a decade or so back everyone was talking about how cell phones could spontaneously explode?

Fear of new technology is a natural psychological response and to be expected. But it takes the media machine to turn consumer hesitation into a frenzy. Any way you slice it, 2023 was one big platform for expressing fears around EVs. Headline-grabbing tales of EV woes often lacked context or understanding of the technology. In a highly partisan landscape where EVs have been dubbed liberal leftist technology, what should be seen as a miraculous pro-American, pro-clean-air, pro-energy independence, pro-cost saving advancement is getting a beating in the press. In this environment, every bit of “bad EV news” spirals out into an echo-chamber of confirmation bias.

For example, Tesla’s recent software update was hyped as a 2 million vehicle “recall” even though the software was updated over the air without a single car needing to leave the driveway. Hertz's recent decision to reduce its Tesla fleet was seen by many as a referendum on the cars’ quality but was actually a decision based on Hertz’s miscalculations around repair costs and a mismatch in their projections of consumer demand for EV rentals.

While the cost of repairs might be higher, maintenance and fuel costs are still much lower than gas vehicles. EVs are better daily-use cars than rentals because while our country’s public charging infrastructure is still lagging, home charging is a huge benefit of EV ownership. Instead, the Hertz move and the negative coverage are further spooking the public.

The Truth About EVs

Despite the challenges, it's crucial to acknowledge the environmental advantages of EVs. For instance, EVs produce zero direct emissions, which significantly reduces air pollution and greenhouse gasses. According to the U.S. Environmental Protection Agency, EVs are far more energy efficient than gas-powered cars, converting more than 77 percent of electrical energy from the grid to power, compared to 12-30 percent for gasoline vehicles.

This efficiency translates to a cleaner, more sustainable mode of transportation. And stories of EVs stranded in Chicago aside, generally they perform well in cold weather, as clearly demonstrated in Norway. In Norway, the average temperature hovers a solid 10 degrees lower than in the U.S. Yet 93 percent of new cars sold there are electric. The first-ever drive from the north to the south pole was also completed by an electric vehicle. The success story of EVs in Norway and demonstration projects in harsh winter climates serve as a powerful counterargument to the notion that EVs are ineffective in cold weather.

So where does this leave us? The discourse around EVs and gasoline vehicles in cold weather needs a more balanced and factual approach. The range loss in gasoline vehicles is a significant issue that mirrors the challenges faced by EVs. By acknowledging this and understanding the broader context, we can have a more informed and equitable discussion about the future of automotive technology and its impact on our environment.

---

Kate L. Harrison is the co-founder and head of marketing at MoveEV, an AI-backed EV transition company that helps organizations convert fleet and employee-owned gas vehicles to electric, and reimburse for charging at home.

In M&A news, a decarbonization-focused firm has acquired only producer in the Western Hemisphere of electric-vehicle-grade permanent magnets. Photo via arapartners.com

Houston private equity firm acquires German magnetic materials producer

M&A moves

Houston-based private equity firm Ara Partners has purchased Germany’s Vacuumschmelze (VAC), a producer of magnetic materials for products such as electric vehicles, from funds overseen by asset manager Apollo. The purchase price wasn’t disclosed.

VAC is the only producer in the Western Hemisphere of electric-vehicle-grade permanent magnets. It also makes magnetic materials for the industrial, aerospace, medical, and renewable energy sectors.

Earlier this year, VAC announced a deal with automotive giant General Motors to build a North American factory for the production of magnets for the electric motors of GM-made EVs. The factory, set to open in 2025, will initially product enough magnets to supply 1 million EVs each year. The magnets will be made of alloys of rare-earth elements.

GM forecasts it will manufacture 1 million EVs per year in North America by 2025.

“We believe the demand for VAC’s differentiated, customized products will continue to grow rapidly as companies around the world decarbonize their industrial processes and the electrification of mobility advances, and we look forward to leveraging our expertise to further enable VAC’s continued success,” Tuan Tran, a partner at Ara Partners, says in a news release.

Ara Partners specializes in investments in the decarbonization sector.

Founded in 1923, VAC was owned by technology conglomerate Siemens for more than 65 years. Ohio’s OM Group acquired VAC in 2011. Four years later, Apollo purchased OM Group for more than $1 billion, putting VAC in the hands of the asset manager.

As of June 30, Ara Partners had about $4.4 billion in assets under management, while Apollo had $617 billion in assets under management.

Ad Placement 300x100

Ad Placement 300x600

CultureMap Emails are Awesome

Property Showcase

Oxy subsidiary secures Microsoft as largest-ever DAC carbon removal credit customer

major move

Occidental Petroleum’s Houston-based carbon capture, utilization and, sequestration (CCUS) subsidiary, 1PointFive, has inked a six-year deal to sell 500,000 metric tons of carbon dioxide removal credits to software giant Microsoft.

In a news release, 1Point5 says this agreement represents the largest-ever single purchase of carbon credits enabled by direct air capture (DAC). DAC technology pulls CO2 from the air at any location, not just where carbon dioxide is emitted.

Under the agreement, the carbon dioxide that underlies the credits will be stored in a below-the-surface saline aquifer and won’t be used to produce oil or gas.

“A commitment of this magnitude further demonstrates how one of the world’s largest corporations is integrating scalable [DAC] into its net-zero strategy,” says Michael Avery, president and general manager of 1PointFive. “Energy demand across the technology industry is increasing, and we believe [DAC] is uniquely suited to remove residual emissions and further climate goals.”

Brian Marrs, senior director for carbon removal and energy at Microsoft, says DAC plays a key role in Microsoft’s effort to become carbon-negative by 2030.

The carbon dioxide will be stored at 1PointFive’s first industrial-scale DAC plant, being built near Odessa. The $1.3 billion Stratos project, which 1Point5 is developing through a joint venture with investment manager BlackRock, is designed to capture up to 500,000 metric tons of CO2 per year.

The facility is scheduled to open in mid-2025.

Aside from Microsoft, organizations that have agreed to buy carbon removal credits from 1Point5 include Amazon, Airbus, All Nippon Airways, the Houston Astros, the Houston Texans, and TD Bank.

Occidental says 1PointFive plans to set up more than 100 DAC facilities worldwide by 2035.

Texas Gov. Greg Abbott demands answers from Houston power company following Beryl

investigation incoming

With around 270,000 homes and businesses still without power in the Houston area almost a week after Hurricane Beryl hit Texas, Gov. Greg Abbott on Sunday said he's demanding an investigation into the response of the utility that serves the area as well as answers about its preparations for upcoming storms.

“Power companies along the Gulf Coast must be prepared to deal with hurricanes, to state the obvious,” Abbott said at his first news conference about Beryl since returning to the state from an economic development trip to Asia.

While CenterPoint Energy has restored power to about 2 million customers since the storm hit on July 8, the slow pace of recovery has put the utility, which provides electricity to the nation’s fourth-largest city, under mounting scrutiny over whether it was sufficiently prepared for the storm that left people without air conditioning in the searing summer heat.

Abbott said he was sending a letter to the Public Utility Commission of Texas requiring it to investigate why restoration has taken so long and what must be done to fix it. In the Houston area, Beryl toppled transmission lines, uprooted trees and snapped branches that crashed into power lines.

With months of hurricane season left, Abbott said he's giving CenterPoint until the end of the month to specify what it'll be doing to reduce or eliminate power outages in the event of another storm. He said that will include the company providing detailed plans to remove vegetation that still threatens power lines.

Abbott also said that CenterPoint didn't have “an adequate number of workers pre-staged" before the storm hit.

Following Abbott's news conference, CenterPoint said its top priority was “power to the remaining impacted customers as safely and quickly as possible,” adding that on Monday, the utility expects to have restored power to 90% of its customers. CenterPoint said it was committed to working with state and local leaders and to doing a “thorough review of our response.”

CenterPoint also said Sunday that it’s been “investing for years” to strengthen the area’s resilience to such storms.

The utility has defended its preparation for the storm and said that it has brought in about 12,000 additional workers from outside Houston. It has said it would have been unsafe to preposition those workers inside the predicted storm impact area before Beryl made landfall.

Brad Tutunjian, vice president for regulatory policy for CenterPoint Energy, said last week that the extensive damage to trees and power poles hampered the ability to restore power quickly.

A post Sunday on CenterPoint's website from its president and CEO, Jason Wells, said that over 2,100 utility poles were damaged during the storm and over 18,600 trees had to be removed from power lines, which impacted over 75% of the utility's distribution circuits.

Things to know: Beryl in the rearview, Devon Energy's big deal, and events not to miss

taking notes

Editor's note: Dive headfirst into the new week with three quick things to catch up on in Houston's energy transition.

Hurricane Beryl's big impact

Hundreds of thousands of people in the Houston area likely won’t have power restored until this week, as the city swelters in the aftermath of Hurricane Beryl.

The storm slammed into Texas on July 8, knocking out power to nearly 2.7 million homes and businesses and leaving huge swaths of the region in the dark and without air conditioning in the searing summer heat.

Although repairs have restored power to nearly 1.4 million customers, the scale of the damage and slow pace of recovery has put CenterPoint Energy, which provides electricity to the nation's fourth-largest city, under mounting scrutiny over whether it was sufficiently prepared for the storm and is doing enough now to make things right.

Some frustrated residents have also questioned why a part of the country that is all too familiar with major storms has been hobbled by a Category 1 hurricane, which is the weakest kind. But a storm's wind speed, alone, doesn't determine how dangerous it can be. Click here to continue reading this article from the AP.

Big deal: Devon Energy to acquire Houston exploration, production biz in $5B deal

Devon Energy is buying Grayson Mill Energy's Williston Basin business in a cash-and-stock deal valued at $5 billion as consolidation in the oil and gas sector ramps up.

The transaction includes $3.25 billion in cash and $1.75 billion in stock.

Grayson Mill Energy, based in Houston, is an oil and gas exploration company that received an initial investment from private equity firm EnCap Investments in 2016.

The firm appears to be stepping back from energy sector as it sells off assets. Last month EnCap-backed XCL Resources sold its Uinta Basin oil and gas assets to SM Energy Co. and Northern Oil and Gas in a transaction totaling $2.55 billion. EnCap had another deal in June as well, selling some assets to Matador Resources for nearly $2 billion. Click here to continue reading.

Events not to miss

Put these Houston-area energy-related events on your calendar.

2024 Young Leaders Institute: Renewable Energy and Climate Solutions is taking place July 15 to July 19 at Asia Society of Texas. Register now.
CCS/Decarbonization Project Development, Finance and Investment, taking place July 23 to 25, is the deepest dive into the economic and regulatory factors driving the success of the CCS/CCUS project development landscape. Register now.
The 5th Texas Energy Forum 2024, organized by U.S. Energy Stream, will take place on August 21 and 22 at the Petroleum Club of Houston. Register now.

View All Listings

ENERGYCAPITALHTX EMAILS ARE AWESOME