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Tesla, the leading electric vehicle maker, is expected to announce an impressive surge in vehicle deliveries, thanks to a boost in sales incentives amidst economic uncertainty and mounting competition.
According to estimates from nine analysts by Refinitiv, Tesla is projected to report global deliveries of 445,000 vehicles in the April to June quarter, marking a 5% increase from the previous quarter’s 422,875 units.
However, Tesla CEO Elon Musk’s ambitious plan to ramp up sales this year faces challenges due to an aging and limited product lineup, coupled with intensifying competition in China and softening demand.
While Tesla aggressively reduced prices since January, impacting its first-quarter margins, the company has refrained from significant price cuts in recent months but has opted for increased discounts as an alternative sales incentive. In the second quarter, discounts for vehicles in inventory were raised to a range of $1,600 to $7,500, while all Model 3s became eligible for full federal credits of $7,500 starting in June in the United States.
In a recent move, Tesla sent out an email campaign titled “The Most American-Made Cars Are S3XY,” offering a three-month Supercharging incentive to customers who take delivery of a Model 3 by June 30, 2023.
To boost sales in China, Tesla’s second-largest market, the company offered an insurance subsidy of 8,000 yuan ($1,104) to customers who ordered and received delivery of a pre-built Model 3 from inventory between June 16 and June 30. Analysts predict that Tesla is set to achieve a 13% increase in China sales compared to the previous quarter, reaching a record number of vehicles sold.
Thomas Martin, senior portfolio manager at Globalt Investments, which holds Tesla stock, noted, “I think China was a little bit better than expected, and so there might be room for a little bit of a positive surprise there.”
While Tesla’s share price has surged over 100% this year, aided by alliances formed with rivals to utilize Tesla’s charging stations and expanded federal credits for Model 3s, concerns have arisen about the impact of lower prices on the company’s margins. This has led some brokerages to downgrade Tesla stock, overshadowing the recent stock market rally fueled by automakers’ deals related to Tesla’s charging infrastructure.
Furthermore, opening up the charging network to competitors carries risks, as stated by Goldman Sachs in a recent report, citing potential loss of Tesla car buyers to other Original Equipment Manufacturers (OEMs) and potential impact on current Tesla owner satisfaction.
Despite these challenges, Tesla’s ability to leverage incentives to drive vehicle deliveries remains a significant factor in its ongoing success in the competitive electric vehicle market.