Electric car manufacturer Tesla announced that it delivered a record number of vehicles in the second quarter of the year, driven by price reductions aimed at boosting sales. The company has strategically lowered prices in key markets such as the US, UK, and China to remain competitive against rival automakers.
Chinese car manufacturers also experienced a surge in sales in June, with major players reporting impressive figures over the weekend. Tesla CEO Elon Musk previously stated that prioritizing higher sales over profits was the right decision for the company.
In the second quarter, Tesla delivered 466,140 vehicles, marking an increase of more than 80% compared to the same period last year. The company also ramped up vehicle production, reaching nearly 480,000 units during the same timeframe.
Experts attribute Tesla’s sales growth to its strategy of becoming a volume manufacturer. Bill Russo, founder, and CEO of advisory firm Automobility, highlighted the impact of lower prices on the sales increase, particularly benefiting the higher-volume Model 3 and Model Y vehicles.
Dan Ives from investment firm Wedbush Securities described Tesla’s price cuts in China as a successful move, positioning the company well in its second-largest market globally. China has become a highly competitive landscape for Tesla, with local electric car manufacturers providing strong competition.
Beijing-based Li-Auto reported record deliveries of 32,575 vehicles in June, achieving its third consecutive monthly sales record. Similarly, Shanghai-based Nio and Guangzhou-based Xpeng witnessed a significant jump in deliveries, reaching 10,707 and 8,620 vehicles, respectively.
Tesla has also faced increased competition in other regions and the impact of higher borrowing costs for customers. In response, the company has implemented price reductions throughout the year.
While these price cuts affected profits, Tesla clarified that its intention was not to start a price war but rather to enhance affordability on a larger scale. The company stated that its overall revenue in the first quarter increased by nearly 25% compared to the previous year, driven by higher car sales. However, profit for the same period declined by 24% due to price reductions and increased raw material and commodity costs.
Tesla is scheduled to release its financial results for the second quarter on July 19, providing further insight into its performance and the impact of its sales strategies.