Tesla is expected to announce its highest-ever quarterly vehicle deliveries, driven by increased discounts and incentives to counter economic uncertainty and growing competition. Analysts anticipate Tesla to report global deliveries of approximately 445,000 vehicles from April to June, a 5% increase compared to the preceding quarter.
While Tesla CEO Elon Musk aims to achieve significant sales growth this year, the company faces challenges such as an aging product lineup and limited offerings in the face of intensifying competition, particularly in the Chinese market, where demand has softened.
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To stimulate sales, Tesla has implemented aggressive price cuts since January, impacting its margins in the first quarter. Although major price reductions have been avoided in recent months, the company has increased discounts and incentives. In the second quarter, discounts for vehicles in inventory were raised to a range of $1,600 to $7,500, and all Model 3s became eligible for the full federal credit of $7,500 starting in June in the United States.
As part of its marketing efforts, Tesla sent out an email promotion titled “The Most American-Made Cars Are S3XY,” offering three months of free Supercharging to customers who take delivery of a Model 3 by June 30, 2023. The “S3XY” reference is a cheeky way of ‘spelling’ out all of the Tesla models, something that Elon has championed ever since the full lineup was completed. In China, Tesla’s second-largest market, the company offered an insurance subsidy of 8,000 yuan ($1,104) to customers who ordered and received an already-built Model 3 from June 16 to June 30. Analysts predict that Tesla will achieve a 13% sales increase in China compared to the previous quarter, setting a new record.
Despite these measures to boost sales, Tesla’s profit margins may be negatively impacted due to lower prices. Some brokerages have downgraded Tesla’s stock as a result. Additionally, Tesla’s decision to open its charging network to rival automakers has raised concerns among analysts, who fear potential loss of Tesla car buyers and a decline in customer satisfaction among existing Tesla owners.
Despite these challenges, Tesla’s stock price has more than doubled this year, buoyed by the support of other automakers adopting Tesla’s charging standard and the expanded federal credits for Model 3s. Moreover, investor enthusiasm for Tesla’s involvement in artificial intelligence has contributed to the recent stock market rally.
Source: Reuters
