Tesla said Saturday that vehicle deliveries from April to June fell 18 percent from the first quarter of the year, a rare slowdown for the company caused by production problems in China.
Tesla sells more electric cars than any other company and, until recently, was expanding rapidly in China, Europe and the United States as rising gasoline prices increased the attractiveness of the battery. The company continues to withstand the turmoil in the supply chain better than rivals like General Motors and Toyota, both of which saw a sharp drop in sales on Friday.
There is a lot of demand for cars, especially electric cars, but the shortage of semiconductors and other key components forces buyers to wait many months for deliveries.
Tesla delivered more than 254,000 vehicles during the quarter compared to 310,000 in the first quarter. It was the first quarterly decline in deliveries since early 2020, when the onset of the pandemic reduced car sales worldwide.
Tesla suggested on Saturday that deliveries could pick up in the coming months as it overcomes supply chain problems, saying it built more cars in June than ever before in its history.
Closures and a shortage of pandemic-related components hampered operations at the company’s factory in Shanghai. China has the largest car market in the world and accounts for about 40 percent of Tesla sales.
Production in China was “an absolute disaster during the months of April and May,” Wedbush Securities analysts Daniel Ives and John Katsingris said in a note to investors last week.
Despite the slowdown in deliveries, Tesla is still doing better than other carmakers. Compared to the first quarter of 2021, Tesla deliveries increased 26 percent. That’s much better than General Motors, which said Friday that its new vehicle deliveries to the U.S. during the second quarter were down 15 percent from the previous year. Similarly, Toyota Motor recorded a 23 percent drop in sales in the United States.
Tesla has more orders than it can fill, but demand could slow if the global economy picks up speed. Elon Musk, Tesla’s CEO, warned in an interview with Bloomberg News in June that a recession was “inevitable at some point” and that “it’s more likely than not” that it will come soon. He has told staff that the company will cut 10 per cent of its salaried workforce.
Tesla seems unlikely to match its growth over last year, when deliveries rose 90 percent to 940,000 cars. A 50 percent increase for 2022 is more realistic, Wedbush analysts said.
That, they said in a note Saturday, is still “an impressive feat” given that China was “essentially closed for two months.”
The slower growth rate is a factor that has led investors to revalue Tesla’s chances of dominating the auto business. Shares of Tesla have fallen more than 40 percent from the maximum in November, although more and more buyers are choosing electric cars because of their superior energy efficiency.
Depending on local service rates, an electric car costs much less to operate than a fossil fuel vehicle. According to the Environmental Protection Agency, a standard Tesla Model 3 range has the equivalent of 142 miles per gallon and costs $ 450 a year per fuel. In comparison, a Honda Accord with a gasoline engine gets 33 miles per gallon and costs $ 2,200 a year in fuel.