New York (AFP) – Tesla reported another hefty drop in auto sales Wednesday, extending a difficult period amid intensifying electric vehicle competition and backlash over CEO Elon Musk’s political activities. The EV maker reported 384,122 deliveries in the second quarter, down 13.5 percent from the year-ago period. Shares rallied after the disclosure, which was better than some leading forecasts in recent days.
The sales figures released Wednesday, which are global, reflect the more contested nature of the EV market, which Tesla once dominated, but which now also features BYD and other low-cost Chinese companies, as well as legacy western automakers like General Motors, Toyota, and Volkswagen. But Musk’s political activism on behalf of right-wing figures has also made the company a target of boycotts and demonstrations, weighing on sales. In recent days, Musk has revived a feud with US President Donald Trump, dragging Tesla shares lower on Tuesday.
The figures portend another poor round of earnings when Tesla reports results on July 23. Analysts currently project a drop of 16 percent to $1.2 billion in profits, according to S&P Capital IQ. Tesla has faced questions about its dearth of new retail auto products to wow consumers after Musk’s futuristic Cybertruck proved polarizing. Analysts will be looking for an update on the state of new offerings after Tesla said in April that it planned “more affordable models” in the first half of 2025. The company has begun deliveries of its revamped Model Y in some markets, according to news reports.
Tesla launched a long-discussed robotaxi venture in Austin, Texas, lending momentum to Musk’s branding of the company as at the forefront of autonomous and artificial intelligence technology. But reports that the self-driving cars have driven recklessly have prompted oversight from US regulators. Heading into Wednesday’s sales figure release, notes from JPMorgan Chase and Deutsche Bank had forecast bigger drops in second-quarter deliveries, citing poor figures in Europe especially. The JPMorgan note was especially bearish, setting a December share price target of $115, down more than 60 percent from today’s levels and citing an expected drag from the elimination of US tax credits for EVs under Trump’s legislation moving through Congress.
But Wedbush’s Dan Ives said Wednesday’s “better-than-feared” report set the stage for growth. “If Musk continues to lead and remain in the driver’s seat, we believe Tesla is on a path to an accelerated growth path over the coming years with deliveries expected to ramp in the back-half of 2025 following the Model Y refresh cycle,” Ives said.
– Political wildcard –
A wildcard remains how Musk’s shifting relationship with Trump could affect Tesla. Musk donated more than $270 million to Trump’s 2024 campaign, barnstorming key battleground states for the Republican. After the election, he oversaw the launch of the “Department of Government Efficiency,” a controversial initiative that eliminated thousands of government jobs that DOGE said were part of a pattern of waste, fraud, and abuse.
But Musk has broken with Trump over the White House’s flagship tax and spending bill, which Musk rated as wasteful and misguided. Musk has called the bill “utterly insane and destructive” and accused bill supporters of backing “debt slavery.” In response, Trump has threatened to target Musk’s business empire and warned of deporting the South African-born Musk. Tesla shares fell more than five percent on Tuesday following this back and forth.
“This high-profile feud introduces political risk,” Briefing.com said in a note Tuesday. “The personal nature of the conflict, amplified by Trump’s comments implying Tesla’s reliance on subsidies for survival, has sparked fears of broader policy shifts targeting Musk’s business empire. This political uncertainty undermines investor confidence.” Tesla shares rose 2.8 percent early Wednesday.
© 2024 AFP
