Tesla Sales in Reverse Gear For Second Straight Quarter

Tesla’s sales fell for the second straight quarter, marking its first back-to-back sales drops since 2012. But its stock still rose 10%.

Photo of a Tesla charging station
Photo by Dark Matter via Unsplash

Sign up for smart news, insights, and analysis on the biggest financial stories of the day.

It’s official: Tesla is on a losing streak.

Elon Musk’s high-flying company said Tuesday that sales fell for the second straight quarter, marking its first back-to-back sales drops since 2012. But its stock still rose 10%. Sometimes all you have to be is not as bad as Wall Street feared.

Less is More (Than Expected)

Tesla has been downplaying expectations since early this year, when executives adopted the talking point that they are “between two major growth waves.” It’s a tacit acknowledgement that the Model 3, introduced in 2017, and Model Y, introduced in 2020, are hot new commodities no more. Earlier this year, the company announced plans to cut 10% of staff to shore up operating margins, which were squeezed by cuts to vehicle prices meant to fend off burgeoning competition from rival automakers in China and the US. Tuesday’s sales numbers, meanwhile, did enough to impress in the face of lowered expectations:

  • The company delivered 443,956 vehicles in the second quarter — while that’s 4.8% less than a year ago, it comfortably beat the FactSet consensus estimate of 436,000. Tesla also manufactured 410,831 electric vehicles in the quarter, or 14.3% less than a year ago — a positive sign, because it suggests the company is managing its unsold inventory to prevent buildup.
  • Tesla will report its full second-quarter results on July 23, but an arguably more important harbinger of the company’s future will take place on Aug. 8, when it plans to host a “Robotaxi day.” CEO Elon Musk claimed last month that Tesla, which has a $724 billion market cap, could one day be worth $30 trillion on the strength of robotics and artificial intelligence innovations — we’d like to see the robotaxi survive 10 minutes on the New Jersey Turnpike before placing any bets.

Little Trouble in Big China: Tesla maintained the crown of the world’s top-selling electric carmaker, but the race is tightening, and its prospects in the highly competitive Chinese market took a major dent Tuesday. Chinese rival BYD sold 426,039 electric vehicles worldwide in the second quarter, a 21% year-over-year increase, putting it within striking distance of being the top seller. Meanwhile, the China Passenger Car Association said sales of Tesla’s China-manufactured vehicles fell 24% year-over-year and 2.2% in June.