Tesla beats expectations as electric car sales begin to rebound

Tuesday's sales numbers point to a “comeback performance” from Tesla after a disastrous first quarter, said Dan Ives, an analyst at Wedbush Securities.

“After six months of intense turmoil, morale has returned to the Tesla story,” he said.

Ives added that there was a consensus that Tesla would miss Wall Street analysts’ expectations, making second-quarter sales “a surprise to even the most bullish investors.” Company watchers were weighing the effects of higher interest rates and weak consumer confidence in electric vehicles.

Tesla is facing a downturn in the electric-vehicle market. Sales of electric vehicles are still growing faster than those of gasoline-powered vehicles, but Tesla and other automakers have had to offer discounts and incentives over the past year in an attempt to attract a broader market beyond early adopters of electric vehicles.

Before this year, Tesla had only reported a decline in annual sales in one quarter, at the height of the pandemic lockdowns in 2020. Tuesday’s report marks the first time the company has seen annual sales decline in consecutive quarters, but the company had hinted at the trend earlier — during an earnings call in January, CEO Elon Musk said Tesla would see “significantly lower growth” this year as the company invests in a next-generation vehicle that it plans to start building in 2025.

In April, the company said it delivered 387,000 vehicles, down more than 20% from the previous quarter and down 8.5% year-over-year. That same month, Tesla reported a 9% decline in annual revenue for the first quarter.

Tesla's rival automakers in the electric vehicle market saw stronger quarterly sales results.

General Motors Co. said Tuesday it sold 696,000 vehicles during the quarter, up 0.6% year-over-year and the company’s best quarterly sales result in more than three years. GM’s electric vehicle deliveries rose 40% from a year earlier.

Sales of electric and hybrid vehicles also helped fuel Toyota’s success. The company sold more than 247,000 electric vehicles in the second quarter, accounting for 40% of total sales for the period and up 63% year-on-year. Across all vehicle types, Toyota reported sales of 622,000 vehicles in the quarter, up 9% year-on-year.