Tesla sales slow as pandemic production swings

Tesla said on Saturday that auto deliveries from April through June were down 18 percent from the first quarter of the year, a rare slowdown for the company due to production problems in China.

Tesla sells more electric cars than any other company, and until recently, it was expanding rapidly in China, Europe and the United States as the price of gasoline increased the appeal of battery power. Other automakers envy Tesla’s growth rate.

Tesla More than 254,000 vehicles delivered in the quarter versus 310,000 in the first quarter. It was the first quarterly drop in deliveries since the start of 2020, when the onset of the pandemic slashed auto sales worldwide.

Tesla sales would have been higher had it not been for the shutdowns and supply chain problems, related to the pandemic, that have hampered operations at the company’s Shanghai plant. China has the world’s largest car market and accounts for about 40 percent of Tesla’s sales.

Production in China was an “absolute disaster in April and May,” Daniel Ives and John Katsingris, analysts at Wedbush Securities, said in a note to investors last week.

Tesla has indicated that it has overcome production problems, saying it has built more cars in June than at any time in its history.

Tesla has more demands than it can meet, but demand could slow if the global economy experiences speed bumps. Tesla CEO Elon Musk warned in an interview with Bloomberg News In June a recession was “inevitable at some point” and “probably” soon. He told the employees that the company would do it cut 10 percent of its paid workforce.

It seems unlikely that Tesla will match its growth compared to last year, when deliveries rose 90 percent to 940,000 vehicles. Wedbush analysts said a 50 percent increase for 2022 is more realistic.

It remains an “impressive achievement” given that China has been “essentially on lockdown for two months,” they said in a note on Saturday.

The slower growth rate is one of the factors that led investors to do this Reassessing Tesla’s Chances of Dominating the Automotive Business. Tesla shares are down more than 40 percent from their peak in November, even as more and more buyers opt for electric cars because of their higher energy efficiency.

Depending on local utility rates, the cost of operating an electric vehicle is much lower than the cost of operating a fossil-fueled vehicle. The Tesla Model 3 has a standard range of 142 miles per gallon and costs $450 per year for fuel, according to the Environmental Protection Agency. By comparison, a Honda Accord with a gasoline engine delivers 33 mpg and costs $2,200 a year for fuel.