Tesla delivered fewer vehicles than expected in the third quarter, facing tough competition in China and Europe that hurt demand for its older models. This situation puts Tesla at risk of experiencing its first annual decline in vehicle deliveries.
On Wednesday morning, shares of the electric vehicle leader dropped more than 6%, nearly wiping out its gains for the year.
Interest in hybrid vehicles is increasing among consumers, and a lack of subsidies in Europe, along with strong competition from Chinese companies like BYD and Xpeng, contributed to the dip in Tesla’s deliveries. These Chinese firms are expanding quickly in the electric vehicle market with support from local government incentives.
Tesla reported a 6.4% increase in deliveries for the July-September period, totaling 462,890 vehicles. However, this fell short of analysts’ expectations of 469,828 vehicles, according to a survey of 12 analysts.
“This shortfall might signal challenges in meeting overall delivery goals for 2024 and raises concerns about sustainable growth beyond the current vehicle lineup,” said Gadjo Sevilla, a senior tech analyst at eMarketer.
To maintain its 2023 delivery target of 1.81 million vehicles, Tesla needs to deliver a record 516,344 vehicles in the fourth quarter. If it falls short, it will mark the company’s first annual drop in deliveries.
This news comes just ahead of a highly anticipated event on October 10 in Los Angeles, where Tesla is expected to unveil its new robotaxi product, shifting its focus toward AI-powered autonomous technologies.
In the third quarter, Tesla delivered 439,975 Model 3 and Model Y vehicles and 22,915 of its other models, which include the Model S sedan, Cybertruck, and Model X SUV. The company produced 469,796 vehicles during the same period.
In July, BMW overtook Tesla as the leader in the European battery electric vehicle market, indicating that Tesla has been losing market share to local competitors, according to a report by JATO Dynamics.
Despite this, some analysts see the increase in deliveries as a positive sign. They believe it shows that recent incentives Tesla introduced to boost demand are having an effect.
“Overall, the fact that deliveries are growing again is crucial, especially considering Tesla’s recent promotions and financing options aimed at stimulating demand in a tough auto market,” said Matt Britzman, a senior equity analyst at Hargreaves Lansdown, who owns Tesla shares.
This spring, Tesla launched several new incentives, such as insurance offers and zero-interest financing, particularly in China, which accounts for a third of its sales.
Tesla’s delivery numbers also exceeded those of rival BYD, which delivered 443,426 battery electric vehicles in the third quarter, partly due to BYD’s focus on plug-in hybrid vehicles that saw a more than 75% increase in deliveries.
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