Tesla acted like a normal car company — and it worked out

A group of Tesla cars sit in a parking lot near the company's factory in California.
Tesla reported another record quarter for deliveries.
  • Tesla just reported its second-quarter production and delivery numbers.
  • Elon Musk's car company produced almost 480,000 vehicles and delivered more than 466,000.
  • But with production outpacing deliveries, there are still challenges on the horizon for Tesla.

It seems like acting like a traditional car company is working out for Elon Musk's Tesla.

The electric vehicle market-leader reported another record period for deliveries, getting just over 466,000 EVs in the hands of customers in the second quarter.

However, the company produced almost 480,000 vehicles in the three months to June 30 – yet again notably higher than what it delivered.

That shows an upward trajectory from a well-received first quarter, when Tesla reported production of 440,000 vehicles and just under 423,000 deliveries.

Having yet another record quarter shows that the legacy auto strategy, alongside price cuts, keeps working

Recently, Tesla has been increasingly acting like the legacy carmakers it long fought hard not to be.

In a shift from the days where it struggled to meet demand, Tesla is now navigating having a supply of inventory that's through the roof compared with demand — something traditional auto companies are quite familiar with.

But it's almost as if Tesla swapped strategies with its incumbent competitors, many of which are sitting on relatively low vehicle inventory right now (and basking in it).

Though auto production is ramping back up post-pandemic, some dealers still have historically low new vehicle supply on their lots. Interestingly, however, there's starting to be a backlog on new EV inventory overall – not just for Tesla

Still, some say there is cause for continued worry for Musk's firm. 

Tesla has offered a slew of price cuts in recent months to boost sales amid its bloated inventory and softening demand, and its vehicles are cheaper than ever — especially with the EV tax credits Teslas qualify for. Prices of Tesla's various models have fallen anywhere from 14% to 28%, per Bloomberg.

In doing so, Musk has sacrificed margins for volume — perhaps a key play in the company asserting its global dominance. While Tesla has a handle on the US EV market by a long shot, it's facing rising competition in China.

Tesla is expected to produce about 1.8 million cars this year, up from 1.3 million in 2022. But if that continues to outpace deliveries, it'll have to take further action, especially as inventory has grown each quarter over the past year. 

"We still see risk of additional price cuts over the rest of the year and into 2024," Deutsche Bank analyst Emmanuel Rosner wrote in a research note on June 26 previewing deliveries.

But, "Beyond, Tesla's longer-term story remains very much intact and best-in-class, in our view," Rosner said.

  Production Deliveries
Q1 2022 305,407 310,048
Q2 2022 258,580 254,695
Q3 2022 365,923 343,830
Q4 2022 439,701 405,278
Q1 2023 440,808 422,875
Q2 2023 479,700 466,140
Source: Tesla
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Contributer : Business Insider https://ift.tt/sZamWlk
Tesla acted like a normal car company — and it worked out Tesla acted like a normal car company — and it worked out Reviewed by mimisabreena on Monday, July 03, 2023 Rating: 5

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