Tesla’s sales rose 10 percent in the second quarter as the Elon Musk-led company benefited from government incentives and price cuts that made its electric cars cheaper than comparable gasoline models.
Tesla delivered 466,000 vehicles from April to June, up from 423,000 in the previous quarter, the company said on Sunday. Compared to a year earlier, second-quarter revenue rose 83 percent as the company expanded production at new factories in Austin, Texas, and near Berlin.
The sales data beat Wall Street analysts’ estimates and showed that Tesla was able to overcome the effect of higher interest rates, which increase monthly payments for people who buy cars on credit.
Rules which went into effect this year, allowed buyers of Tesla cars to qualify for $7,500 in federal tax credits. With credit, the cheapest Model 3 sedan sells for less than $33,000, which is cheaper than similar luxury sedans sold by Mercedes-Benz and BMW that run on gasoline and are in line with mass-market cars like the Toyota Camry and Honda Accord.
Electric car owners also benefit from fuel savings and lower maintenance costs. Electric cars don’t require oil changes, and electricity is generally cheaper per mile than gasoline.
Tesla is the dominant electric car maker in the United States with a 62 percent market share in the first quarter, according to Kelley Blue Book. However, its share fell from more than 70 percent in early 2022 as established automakers such as General Motors, Ford Motor and Volkswagen began offering more electric models.
In China, a larger auto market than the United States or Europe, Tesla faces intense competition from local manufacturers that have newer model lines such as BYD. According to consulting firm AlixPartners, electric vehicles from Chinese manufacturers are in showrooms for a little more than a year on average. Tesla’s most popular car, the Model Y sport utility vehicle, went on sale in 2020.
Chinese manufacturers also offer interior and exterior styling and entertainment and infotainment systems that better suit local tastes, AlixPartners noted, citing consumer surveys.
While Tesla’s sales continued to rise, the company’s revenue profitability suffered because it had to cut prices to support demand. Tesla earned $2.5 billion in the first quarter, down from $3.7 billion in the final three months of 2022.
Many investors are betting that Tesla’s growth will accelerate as demand for electric vehicles grows and the company starts selling the Cybertruck, an electric pickup truck, later this year. Tesla’s agreement to let other automakers, including Ford and GM, use theirs charging network can also become a new source of income.
Tesla’s stock price has more than doubled this year, though it remains well below its peak in 2021, when the company was worth more than $1 trillion.
The automaker said on Sunday that it will publish the financial results for this year’s second quarter on July 19.