Austin, Texas — Tesla has seen a significant drop in quarterly vehicle deliveries, marking what looks to be its second consecutive annual decline in sales as demand wanes amid scrutiny over CEO Elon Musk’s political positioning and an aging vehicle portfolio. The company reported delivering 384,122 vehicles in the second quarter, down 13.5% from 443,956 units during the same period last year.
Analysts had anticipated a more favorable outcome, with projections for deliveries averaging around 394,378 vehicles, based on estimates from 23 financial analysts. Some predictions even dipped as low as 360,080 units, indicating a broad range of expectations. The number of vehicles delivered is a critical gauge for assessing both sales performance and production effectiveness within the automotive industry.
Seth Goldstein, a senior equity analyst at Morningstar, noted that the market’s response to Tesla’s delivery figures may be more optimistic than initially feared, particularly as several analysts revised their forecasts downward prior to the announcement. The situation comes amid a 25% decline in Tesla’s stock this year, driven by concerns over potential brand erosion, especially in Europe, where sales have declined sharply. Musk’s growing association with right-wing politics, particularly during his public break with former President Trump, has intensified worries among investors. Following their fallout in early June, Tesla’s market value plummeted by approximately $150 billion.
Despite this, Tesla’s stock has shown some recovery, but the ongoing public dispute between Musk and Trump has reignited concerns over the company’s reputation and future. Musk’s attempt to revitalize demand was evidenced earlier this year through a refreshed version of the Model Y crossover; however, the redesign led to production delays, prompting buyers to postpone their purchases.
Revenue and profitability for Tesla heavily depend on its electric vehicle marketing, with much of its lofty valuation linked to Musk’s ambitious vision of transforming its fleet into a network of robotaxis. Recently, the company launched a limited robotaxi service in select areas of Austin, albeit under strict conditions, including the presence of a safety monitor in each vehicle. The initiative has attracted scrutiny from the U.S. National Highway Traffic Safety Administration, which is investigating the service’s rollout.
To cap off its ambitious plans, Tesla announced it would begin producing a more affordable vehicle, speculated to be a simplified version of the Model Y, by the end of June. While the introduction of a budget-friendly model may provide a boost to sales, analysts predict that the company is headed towards another year of declining total sales.
For Tesla to meet Musk’s target of regaining growth this year, the automaker would need to deliver over a million units in the latter half of the year—an ambitious goal that would set a new record. Analysts warn, however, that achieving such numbers is a daunting challenge, particularly as sales typically surge in the second half of the year.
As Tesla navigates these turbulent waters, the road ahead remains uncertain, with the company grappling not only with internal production challenges but also with external political dynamics that may continue to impact consumer perception and sales.