Tesla sales rose 10 percent in the second quarter as the Elon Musk-led company benefited from government incentives and price cuts that made its electric cars cheaper than comparable petrol models.
Tesla delivered 466,000 vehicles from April to June, up from 423,000 vehicles in the previous quarter, the company said on Sunday. Year-over-year, second-quarter sales rose 83 percent as the company expanded production at new factories in Austin, Texas and near Berlin.
The sales figures beat Wall Street analysts’ estimates and showed that Tesla was able to overcome the effect of higher interest rates, which increase monthly payments for people who buy cars on credit.
The rules, which went into effect this year, allowed buyers of Tesla vehicles to qualify for $7,500 in tax credits. With the credit, the most affordable Model 3 sedan sells for less than $33,000, which is cheaper than comparable luxury sedans from Mercedes-Benz and BMW that run on gasoline and rival mass-market cars like the Toyota Camry and Honda Accord .
Electric car owners also benefit from fuel savings and lower maintenance costs. EVs do not require an oil change and electricity is generally cheaper per mile than gasoline.
According to Kelley Blue Book, Tesla is the dominant EV maker in the US with a 62 percent market share in the first quarter. But its share has fallen from over 70 percent at the start of 2022 as established automakers like General Motors, Ford Motor and Volkswagen have started offering more electric models.
In China, a larger auto market than the US or Europe, Tesla faces stiff competition from local manufacturers with newer model lines, such as BYD. According to AlixPartners, a consulting firm, electric vehicles from Chinese manufacturers have been in showrooms for just over a year on average. Tesla’s most popular car, the Sport Utility Vehicle Model Y, was released in 2020.
Chinese manufacturers are also offering interior and exterior design, entertainment and information systems that better cater to local tastes, AlixPartners found, citing consumer surveys.
While Tesla sales have continued to rise, the company’s profitability has suffered as it has had to cut prices to stimulate demand. Tesla earned $2.5 billion in the first quarter, compared to $3.7 billion in the last three months of 2022.
Many investors are betting that Tesla’s growth will accelerate as demand for electric vehicles increases, and the company will start selling the Cybertruck, an electric pickup truck, later this year. Tesla’s agreement to allow other automakers, including Ford and GM, to use its charging network could also become a new revenue stream.
Tesla’s stock price has more than doubled this year, although it’s still well below its peak in 2021, when the company was valued at more than $1 trillion.
The automaker announced on Sunday that it would release its financial results for the second quarter of this year on July 19.