Tesla said on Saturday that car deliveries from April to June fell 18 percent from the first quarter of the year, a rare slowdown for the company caused by manufacturing problems in China.
Tesla sells more electric cars than any other company and until recently has been expanding rapidly in China, Europe and the United States as rising gas prices have increased the appeal of the battery. Other automakers envied Tesla’s growth rate.
Tesla delivered more than 254,000 vehicles in the quarter, compared with 310,000 in the first quarter. It was the first quarterly decline in shipments since early 2020, when the onset of the pandemic undermined global auto sales.
Tesla’s sales would likely have been even higher had it not been for shutdowns and supply chain issues related to the pandemic that have hampered operations at the company’s Shanghai factory. China has the world’s largest car market and accounts for about 40 percent of Tesla’s sales.
Manufacturing in China was “an absolute disaster in the months of April and May,” Daniel Ives and John Katsingris, analysts at Wedbush Securities, said in a note to investors last week.
Tesla suggested it had overcome production problems, saying it produced more cars in June than ever before.
Tesla has more orders than it can fill, but demand could slow if the global economy takes a hit. Elon Musk, Tesla’s CEO, warned in an interview with Bloomberg News in June that a recession is “inevitable at some point” and that it is “more likely than not” to come soon. He told staff that the company would cut 10 percent of its workforce.
It seems unlikely that Tesla will match its growth from last year, when deliveries rose 90% to 940,000 cars. A 50 percent increase for 2022 is more realistic, Wedbush analysts said.
That, they said in a note on Saturday, was still an “impressive achievement” given that China was “essentially on lockdown for two months”.
The slower growth rate is one factor that has caused investors to reassess Tesla’s chances of dominating the auto business. Tesla shares have fallen more than 40 percent from their peak in November, even as more buyers are choosing electric cars for their superior energy efficiency.
Depending on local utility rates, an electric car costs significantly less to operate than a fossil fuel vehicle. The Tesla Model 3’s standard range gets the equivalent of 142 miles per gallon and costs $450 a year to fuel, according to the Environmental Protection Agency. By comparison, a gasoline-powered Honda Accord gets 33 miles per gallon and costs $2,200 a year to fuel.
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