Tesla reported lower-than-expected third-quarter deliveries on Wednesday, raising concerns over slowing demand and intensifying competition in the electric vehicle (EV) market. Despite a 6.4% increase from a year earlier, with 462,890 vehicles delivered between July and September, the numbers fell short of the 469,828 vehicles expected by analysts. This miss caused Tesla shares to drop more than 6%, as the company now faces the possibility of its first-ever annual decline in deliveries after years of rapid growth.
Tesla, the world’s most valuable automaker, has been relying on price cuts and incentives, including zero-interest financing and insurance offers, to attract buyers. However, these strategies have been insufficient to boost demand for its aging lineup, particularly in the U.S. and Europe. China, which accounts for a third of Tesla’s sales, showed relative strength thanks to these incentives, but the overall demand picture remains weak. Analyst Dan Ives from Wedbush Securities noted that U.S. and European demand lagged, contributing to the overall shortfall.
The EV maker is now under pressure to deliver a record 516,344 vehicles in the fourth quarter to prevent a decline in 2024, a target that some analysts believe is unlikely. “There’s only so much Tesla can do with price cuts and incentives while offering no fresh vehicles for customers,” said Sandeep Rao, a senior researcher at Leverage Shares. Competition, especially from Chinese automakers like BYD, which delivered 443,426 battery-electric vehicles in Q3, is also mounting.
Tesla’s focus is now shifting toward its upcoming Oct. 10 event in Los Angeles, where it is expected to unveil its robotaxi product, a move aimed at highlighting the company’s autonomous driving technologies. While some investors remain hopeful, the ongoing pressure on Tesla’s profit margins due to aggressive pricing strategies is a growing concern for long-term profitability.
Despite the challenges, some analysts see positive signs in Tesla’s return to quarterly growth after two consecutive quarters of declining sales. Matt Britzman, a senior equity analyst at Hargreaves Lansdown, noted that the growth in deliveries suggests that Tesla’s incentives are having some impact. Tesla’s deliveries were led by its popular Model 3 and Model Y vehicles, accounting for 439,975 units, while the remaining 22,915 deliveries came from models like the Cybertruck, Model S, and Model X.
As Tesla navigates a rapidly evolving EV market, the company’s next moves—particularly in terms of new models and pricing strategies—will be critical to sustaining its position amid increasing competition.