Tesla's deliveries drop again as competition, Musk backlash hit demand

Still, shares of the electric automaker jumped 3 per cent in early trading as the decline proved less severe than the bleakest analyst projections

Don't want to miss the best from Business Standard?

Sales of Tesla electric cars fell sharply in the last three months as boycotts over Elon Musk's political views continue to keep buyers away, a significant development given expectations that anger with the company's billionaire CEO would have faded by now. 

The company reported a 13 per cent plunge in sales on Wednesday in a sign that Musk's embrace of US President Donald Trump and far-right politicians in Europe has had a deep and enduring impact on Tesla's brand appeal. 

The new figures show rival electric-vehicle makers have wasted no time to pounce on the company's weakness to steal market share and suggest Tesla's quarterly earnings report later this month could also disappoint. 

Sales fell to 384,122 in April through June, down from 443,956 in the same three months last year. During the latest period, Musk formally left the Trump administration as a cost-cutting czar, and hopes rose that sales would recover. Musk himself recently said that Tesla was in the midst of a “major rebound” in sales. 

Still, some parts of the report were encouraging. Sales of the Models 3 and Y totaled 373,728, above the estimate of 356,000 from Wall Street analysts. Tesla shares rose 3.7 per cent in morning trading. 

“The numbers weren't as bad as thought with all the analyst forecast cuts we saw over the past week,” said Morningstar's Seth Goldstein, though he added the report overall showed the company faces big challenges. 

“The current product lineup is at market saturation and Tesla will need the new affordable vehicle to grow deliveries.” Musk has promised a cheaper EV model would be coming this year that would boost sales. 

It's not clear yet if Musk's latest feud with Trump will help lure back buyers who have been angry at the billionaire's political positions. 

After Musk once again took to social media to criticise Trump's budget bill, the president threatened Tuesday to use the power of his office to hurt his companies, including Tesla, pushing its stock down more than 5 per cent. 

The new figures come as Tesla is focusing less on new models and more on robots, self-driving technology and robotaxis ferrying passengers around without anyone behind the wheel. 

Tesla is in the midst of a test run of robotaxis in Austin, Texas, that seems to have gone smoothly for the most part. But it also has drawn the scrutiny of federal car safety regulators because of a few mishaps, including one case in which a Tesla cab was shown on a video heading down an opposing lane. 

The competition from rival EV makers is especially fierce in Europe where China's BYD has taken a bite out of its market share. Tesla sales fell 28 per cent in May in 30 European countries even as the overall market for electric vehicles expanded sharply, according to the European Automobile Manufacturers' Association. 

Musk has acknowledged that his work as head of the Department of Government Efficiency and his embrace of European far-right candidates have hurt the company. But he attributed much of the sales plunge to customers holding off while they waited for new versions of Tesla's best selling Model Y. 

Tesla reports second quarter financial result on July 23. In the first quarter, net income fell 71 per cent.