Tesla sells cars at a record high thanks to price cuts

Tesla sold 466,140 cars worldwide in the second quarter, a record high and well ahead of Wall Street analysts' estimates.

Analysts previously surveyed by Bloomberg forecast Tesla will deliver 448,350 vehicles in the latest quarter. But record-high actual sales have proven Tesla CEO Elon Musk's pledge - of pursuing volume by reducing prices - has worked.

"It's a big bet," Ben Kallo of Robert W. Baird Investments said in an interview.

The number of vehicles delivered in the second quarter marked a new record sales for Tesla and increased 83% year-over-year. The company also narrowed the gap between production and delivery - a number closely watched by analysts - to 13,560 units in the second quarter. In the first quarter of this year, Tesla produced nearly 18,000 more cars than it delivered to customers.

"People are worried about increasing inventories and it seems Tesla has normalized this," Kallo said.

Tesla sells cars directly to consumers, and they have many ways to boost sales. In addition to reducing prices across its entire product line earlier this year, the electric car maker has introduced many perks for customers, such as three months of free fast charging in the US for vehicles delivered before 30/30. 6. Analysts have predicted the price drop to continue next year.

Tesla does not disclose quarterly vehicle deliveries by vehicle type or region. The Model 3 and Y account for about 96% of the company's sales, and Tesla also makes the Model S and X.

Tesla easily holds the crown as the largest electric vehicle manufacturer in the US, but the company is facing competition from a host of new names around the world. Model Y, Tesla's latest model, appeared on the market from 2020.

In China, Tesla's second-biggest market, the company has lagged behind BYD. The Chinese automaker has more new product lines and growing global ambitions. Last week, Tesla said it would continue to reduce the price of high-end electric vehicles sold in China by more than 4.5%, following its decision to offer cash subsidies to some Model 3 buyers last month.

The price war was started by Tesla at the end of last year. In the first quarter, Tesla lowered car prices four times. In April, they dropped two more times. This caused first-quarter revenue to drop $1.3 billion from the previous quarter to $23.3 billion, despite a record number of vehicle deliveries.

This also puts pressure on profit margins. Accordingly, the company's gross profit margin in the first quarter of this year was 19.3%. This is the lowest level since the end of 2020 - when they were hit hard by the pandemic.