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. Other carmakers envied Tesla’s growth rate.
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 sales would probably have been even higher had it not been for the pandemic-related outages and supply chain problems that 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.
Tesla suggested it had overcome production problems, saying it built more cars in June than ever before in its history.
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.