by the numbers

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

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.

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A View From HETI

Lilium aims for the first piloted flight of the Lilium Jet to occur early in 2025. Photo via lilium.com

An aircraft that's being touted as the first fully electric jet is taking off from Hobby Airport to serve the greater Houston area.

Lilium Jet, which takes off and lands vertically, is making its United States market debut at Houston-area facilities – Houston Hobby Airport, Conroe North Houston Regional Airport, and The Woodlands Heliport Lilium. Houston-based aircraft brokerage EMCJET will house the Lilium Jet at its Galaxy FBO Houston-area facilities at the airports.

“We are excited to transform Galaxy FBO into a cutting-edge hub for the eVTOL innovation,” Jeremy Gee, CEO of Galaxy FBO, says in a news release. "As the future of electric aviation takes flight, this marks a significant step in making Houston a leader in sustainable and efficient transportation solutions. Our team is proud to support Lilium's revolutionary mode of travel that will connect Greater Houston in ways never thought possible."

The Lilium Jet is capable of quickly connecting routes like Houston Hobby Airport to Galveston, Houston Spaceport to College Station, The Woodlands to Galveston, and others. The jet is designed for regional travel with its aerodynamic shape. The ducted electric fans prioritize efficiency and speed during forward flight. The jet’s anticipated initial operating range is roughly 110 miles. Lilium aims for the first piloted flight of the Lilium Jet to occur early in 2025.

“Lilium is serious about expanding in the U.S. and actively progressing towards FAA validation,” Lilium’s Vice President of Commercial Americas Matthew Broffman says in a news release.” As part of our commitment to working with communities across the U.S. and expanding our customer base, we’re excited to showcase our aircraft for the first time in Houston, a city with a proud legacy of aerospace innovation in America.”

The Greater Houston Partnership will also host a discussion with industry leaders on how electric aviation can “revolutionize regional travel” according to a news release.

“Houston is home to the world’s leading aerospace companies, and we’re thrilled to welcome Lilium and this next generation of aviation technology,” says Kevin Tipton, senior director for aerospace and aviation at GHP in a news release. “Together, we’re on the brink of something groundbreaking for our region.”

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