[AUSTIN] Tesla’s rally off the back of launching a limited driverless taxi service is about to be tested by what analysts expect will be another downbeat quarterly sales report.
The electric-car maker likely delivered around 389,400 vehicles in the three months that ended in June, according to analysts’ estimates compiled by Bloomberg. That would be down roughly 12 per cent from a year earlier, following a 13 per cent drop in the first quarter.
Chief executive officer Elon Musk managed to divert investor attention away from vehicle sales during the quarter by building anticipation for the robotaxi service Tesla started up late last month. While the company only offered rides to a coterie of fans in a small portion of Austin – and footage of several drives drew scrutiny from federal safety regulators – Tesla’s shares rose 23 per cent during the last three months.
The stock is off to a rough start for the third quarter, with Musk and US President Donald Trump renewing their feud over the US$3.3 trillion tax and spending bill. Tesla shares slumped 4.8 per cent as at 1.20 pm on Tuesday (Jul 1) in New York and are down 25 per cent for the year.
Missing models
Tesla told investors when the company last reported earnings in April that new vehicles, including more affordable models, remained on track to go into production during the first half of the year. Cheaper new cars did not materialise, leading several analysts to speculate they may be delayed.
The absence of all-new vehicles – or more affordable versions of the Model 3 or Y – may have contributed to prolonging Tesla’s sales slump. Deliveries fell to an almost three-year low in the first quarter, as the company changed over factory lines to produce the refreshed Model Y and dealt with consumer backlash against Musk’s increasing involvement in global politics.
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Most analysts now expect Tesla to report its second consecutive annual decline in vehicle sales. Analysts surveyed by Bloomberg are on average projecting the company to deliver around 1.7 million vehicles in 2025, a roughly 8 per cent drop from 1.8 million last year.
“Even if the second half turns better, and they can stop the decline, it likely won’t be enough to offset” first-half weakness, said Seth Goldstein, senior equity analyst at Morningstar Research. “But for Tesla, the market is really turning to robotaxi and less about delivery growth.”
Musk backlash
After acknowledging in April that Tesla had dealt with “some blowback” over his work for Trump, Musk told Bloomberg News in May that the company’s sales had turned around. He’s now assumed oversight of the company’s deliveries in Europe and the US, following the departure of long-time deputy Omead Afshar, according to sources familiar with the matter.
As deliveries lag, Musk has hyped Tesla’s robotaxi service and broader efforts to develop artificial intelligence and humanoid robots.
“Tesla looks like a tale of two companies: the car business and the autonomy business,” said Gene Munster, managing partner of Deepwater Asset Management. Although its car sales are no longer growing, he sees autonomy driving Tesla’s value over the long term.
Munster said the robotaxi service will need to scale up in the coming months, including by offering rides in a broader area and deploying more vehicles.
“The central question is, do you believe cars will be autonomous and electric in the future? If the answer is yes, Tesla will pull through and will be in a really good place,” Munster said. BLOOMBERG
