December 3, 2023

Brighton Journal

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Tesla sales increase as demand for tax credits increases

Tesla sales increase as demand for tax credits increases

Tesla sales rose 10 percent in the second quarter as the Elon Musk-led company took advantage of government incentives and price cuts that made its electric cars less expensive than comparable gasoline models.

The company said on Sunday that Tesla delivered 466,000 vehicles from April to June, up from 423,000 vehicles in the previous quarter. Compared to a year earlier, sales in the second quarter rose 83 percent as the company expanded production at new plants in Austin, Texas, and near Berlin.

The sales figures beat estimates by Wall Street analysts and showed that Tesla was able to overcome the impact of higher interest rates, which raise monthly payments for people who buy cars on credit.

Rules that went into effect this year allowed buyers of Tesla cars to qualify for $7,500 in federal tax credits. With credit, the most affordable Model 3 sedan sells for less than $33,000, cheaper than similar luxury gasoline-powered sedans sold by Mercedes-Benz and BMW and in line with mass-market cars like the Toyota Camry and Honda Accord.

Electric vehicle owners also benefit from fuel savings and lower maintenance costs. Electric cars don’t require an oil change, and electric is generally cheaper per mile than gasoline.

Tesla is the dominant manufacturer of electric vehicles in the United States, with 62 percent market share in the first quarter, according to Kelley Blue Book. But its share has slipped from more than 70 percent at the start of 2022 as well-known automakers such as General Motors, Ford Motor and Volkswagen begin offering more electric models.

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In China, a larger auto market than the United States or Europe, Tesla faces stiff competition from local manufacturers with newer model lineups, such as BYD. On average, Chinese manufacturers’ electric cars have been in showrooms for just over a year, according to consulting firm AlixPartners. Tesla’s most popular vehicle, the Model Y SUV, went on sale in 2020.

AlixPartners noted that Chinese manufacturers also offer interior and exterior design and infotainment systems that better cater to local tastes.

While Tesla sales continued to rise, the company’s profitability took a hit because it had to cut prices to support demand. Tesla made $2.5 billion in the first quarter, down from $3.7 billion in the last three months of 2022.

Many investors are betting that Tesla’s growth will accelerate as demand for electric vehicles grows, and the company has begun selling the Cybertruck, an electric pickup truck, later this year. Tesla’s agreement to allow other automakers, including Ford and GM, to use its charging network could become a new revenue stream.

Tesla’s share price has more than doubled this year though it’s still well below its peak in 2021, when the company was valued at more than $1 trillion.

The automaker said on Sunday it will publish its financial results for the second quarter of this year on July 19.