LDN - Business

Tesla set to report record quarterly vehicle deliveries, fueled by incentives

[June 30, 2023] By Hyunjoo Jin and Akash Sriram

SAN FRANCISCO (Reuters) - Tesla is set to report record vehicle deliveries, after the top electric vehicle maker increased discounts and other incentives to boost sales in the face of economic uncertainty and rising competition.

Tesla is expected as early as this weekend to report global deliveries of 445,000 vehicles in April to June, according to the average estimates of nine analysts by Refinitiv. That would be an increase of 5% from 422,875 the preceding quarter.

Tesla CEO Elon Musk's plan to sharply increase sales this year faces challenges from aging and limited product line-ups as competition intensifies especially in China, and demand softens.

Tesla has cut prices aggressively since January, eroding its first-quarter margins. It has avoided major price cuts in the past couple of months but has increased discounts, another form of sales incentive. It raised discounts in the second quarter for vehicles in its inventory to a $1,600-to-$7,500 range, and made all of its Model 3s eligible for full federal credits of $7,500 starting in June in the United States.

Tesla this week sent out an email, "The Most American-Made Cars Are S3XY," offering three months of Supercharging to those who take delivery of a Model 3 by June 30, 2023.

In China, its second-biggest market after the United States, Tesla offered an insurance subsidy of 8,000 yuan ($1,104) to customers who ordered and completed the delivery of an already-built Model 3 in the inventory from June 16 to June 30. Tesla is set to increase China sales by 13% from the previous quarter to a record number of vehicles, according to an analyst.

"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," said Thomas Martin, senior portfolio manager at Globalt Investments, which holds Tesla stock.

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Visitors check a Tesla Model 3 car next to a Model Y displayed at a showroom of the U.S. electric vehicle (EV) maker in Beijing, China February 4, 2023. REUTERS/Florence Lo/File Photo

Tesla also offers discounts in Europe and Tesla appears to have tapped the brakes on a production increase at its Berlin factory, hiring fewer temporary workers and refraining from Saturday shifts.

MARGINS

Lower prices could weigh on its margins, which has prompted some brokerages to downgrade Tesla stock and overshadows a recent stock market rally driven by a flurry of deals by automakers to use Tesla's charging stations.

Tesla's share price has more than doubled this year, helped by rivals backing Tesla's charging standard, as well as expanded federal credits for Model 3s and investor excitement over artificial intelligence.

Some analysts were cautious about Tesla's deals to open its charging network to rivals. "The biggest risks of opening the charging network in our opinion are potentially losing Tesla car buyers to other OEMs, and decreasing current Tesla owner satisfaction," Goldman Sachs said in a recent report.

($1 = 7.2436 Chinese yuan renminbi)

(Reporting by Hyunjoo Jin in San Francisco and Akash Sriram in Bengaluru; Additional reporting by Joseph White in Detroit and Zoey Zhang in Shanghai; Editing by Peter Henderson and Matthew Lewis)

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