Tesla’s Sales Take a Hit: What’s Behind the Drop?

Tesla is facing a setback as its second-quarter deliveries are projected to fall by 3.7%, marking the first time the EV maker has seen back-to-back quarterly declines. The drop is linked to intense competition in China and a sluggish demand for new, more affordable models.

Analysts predict Tesla will deliver about 438,000 vehicles in the April-June period, with seven analysts cutting their forecasts in the last three months. The company is set to announce its second-quarter delivery results on July 2.

The challenges come after years of rapid growth, with Tesla announcing in January that delivery growth would “significantly slow down” in 2024 due to the waning effects of price cuts.

Tesla’s stock has taken a hit this year, falling by a quarter, making it one of the worst-performing stocks in the S&P 500. To cut costs, Tesla has taken measures including laying off workers.

Analysts anticipate Tesla may see its first annual sales decline this year. In the first quarter, deliveries were down, and Wall Street wasn’t pleased.

In Europe, Tesla’s sales have been weak, especially in May, when they fell by 36%. This is partly due to fewer electric car subsidies and lower demand from fleet operators.

In China, Tesla is facing competition from local brands launching cheaper models faster. CEO Elon Musk said in April that new, more affordable models would be coming later this year but didn’t provide pricing details.

Last year, Tesla updated its Model 3 but didn’t make significant changes to its other popular cars, the Model Y SUV, the Model S sedan, and the Model X SUV.

Tesla’s Cybertruck electric pickup, which started shipping late last year, has faced some issues, including recalls.

In May, Tesla’s latest report on its environmental impact didn’t mention its goal of making 20 million electric cars a year by 2030, which is a significant shift from its previous plans.

Tesla is gearing up to launch its self-driving taxis later this year, hoping to boost its “Full Self-Driving” software. But more details on production timelines and quantities are awaited.