Tesla reported record quarterly global auto sales after it cut prices on its autos and customers reap the benefits of renewed tax credits for purchasing its electric vehicles.
The Elon Musk-led carmaker announced Sunday it had sold 466,000 vehicles worldwide — 4% higher than Wall Street estimates.
The company will not break out global regional sales until a later financial update this month, but had earlier announced significant price cuts in China, its second-largest market after North America.
It had also announced its vehicles would once again be eligible for federal tax credits implemented under President Joe Biden’s Inflation Reduction Act. According to its website, Tesla’s lowest-priced vehicle, the Model 3, would cost $32,740 after the $7,500 federal tax credit kicks in.
Tesla has cut prices across its vehicle lineup several times in recent months — at times even more aggressively than its more established rivals at Ford and Hyundai-Kia. The moves prompted some speculation that Tesla was eager to undercut its competitors, but CEO Elon Musk rejected that notion.
“We’re not ‘starting a price war,’ we’re just lowering prices to enable affordability at scale,” he wrote on Twitter in April.
The story around electric vehicles is changing
Many analysts said the latest delivery figures come as a surprise, especially given the slowdown in global economic growth.
In fact, Benjamin Kallo, a senior research analyst at the R.W. Baird financial group, said budget-conscious consumers are now increasingly looking to electric vehicles in order to save money.
‘We’re seeing the shift to going electric,’ he said. Aside from the environmental benefit of clean-energy vehicles, they also cost less to fuel and maintain, which protects consumers from the effects of volatile oil and gasoline prices.
Irvine, California-based electric truck maker Rivian also announced strong quarterly deliveries Sunday.
In a note to clients following Tesla’s update, auto analysts with Morgan Stanley wrote that while auto consumers would “love” some new, competitive entrants into the EV marketplace, they still deem Tesla a ‘superior’ value for the money, something that is “continuing the company’s dominant EV share position.”
Prices of mass-market electric vehicles are also declining, due in part to dramatic reductions in the cost of EV battery packs. The Energy Department reported earlier this year that, as of 2022, those batteries cost 89% less than they did in 2008.
Sales prices have fallen, too. The average transaction price for a new vehicle was $48,528 as of May, which is on par with several modern EVs like the Kia EV6, which retails for $48,700. The Subaru Solterra starts at $44,995, and the Toyota bZ4x (which shares its underpinnings with the Solterra) retails for $42,000.
Tesla shares climbed almost 7% in Monday trading, one day before markets closed for the July Fourth holiday. Tesla’s stock price is up almost 150% on the year to approximately $280 a share, though that remains short of its record $407 seen in November 2021.