Can Tesla Produce 400,000 Vehicles in the Second Quarter?

Investing

Published: June 20, 2024 7:10 am

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Tesla Inc. (NASDAQ: TSLA) needs to produce 400,000 vehicles in the current quarter, or investor disappointment will be tremendous.

How many vehicles will Tesla Inc. (NASDAQ: TSLA) produce in the quarter that will end on June 30? The fate of the stock, which has already fallen sharply this year, is at stake. The electric vehicle (EV) maker delivered 433,371 vehicles in the first quarter. There is considerable concern that second-quarter numbers will be less than that.

Several factors will affect the second-quarter production figures. First is whether a price war Tesla started will gain sales (which Tesla measures in addition to production). The discounts started in China at the end of last year and, early this year, moved to the United States. Investors generally do not like the pressure this puts on margins. On the other hand, the decision may be what thwarts sales gains by the competition.

Tesla suffers because it has not launched a new vehicle in years. The sole exception is the Cybertruck. With a manufacturer’s suggested retail price of over $90,000, it is not going to add much to Tesla’s unit production figures.

Tesla also has more competition than it did a year ago. In China, there are over half a dozen EV companies large enough to take sales. This includes BYD, which for a time late last year was the world’s largest EV manufacturer. In the United States, several car companies that have struggled with EV sales have started to show modest progress. Ford’s U.S. EV sales rose 87.8% in the first five months of the year, although the total was only 37,208.

Ford and BYD are not Tesla’s only competitors. Every major global manufacturer has invested billions of dollars to enter the EV market.

Finally, EV sales have suffered in general, at least in the United States. People find EVs too expensive. They worry about the range they get on one charge, and many potential buyers are concerned about the scarcity of charging stations.

Tesla needs to produce 400,000 vehicles in the current quarter, or the disappointment will be tremendous.

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