Tesla, the world's leading electric vehicle (EV) manufacturer, reported its third-quarter delivery numbers on Wednesday, falling short of Wall Street's expectations and causing its shares to dip by 3.5% in premarket trading. The EV maker delivered 462,890 vehicles between July and September, marking a 6.4% increase from the previous quarter. However, this fell below analysts' average forecast of 469,828 deliveries, a key indicator closely monitored by investors.
As Tesla heads into the final quarter of 2024, the company faces significant pressure to meet its annual target of delivering 1.81 million vehicles. To achieve this, Tesla must deliver a record 516,344 vehicles in the last quarter, a challenging feat given the increasing competition in major markets like China and Europe, coupled with changing consumer dynamics.
In the third quarter, Tesla struggled with intensifying competition from Chinese automakers such as BYD and Xpeng, which have been expanding aggressively in their home market, supported by government subsidies. BYD, Tesla's closest rival in China, delivered 443,426 battery electric vehicles during the same period, slightly below Tesla's numbers. However, BYD saw a 75% surge in plug-in hybrid vehicle sales, further eroding Tesla's dominance.
Europe also presented challenges for Tesla. In July, BMW overtook Tesla in European battery electric vehicle sales for the first time, according to a report by JATO Dynamics. Tesla's market share in Europe has been shrinking as domestic manufacturers like Volkswagen, BMW, and Mercedes-Benz ramp up their electric offerings. The absence of government subsidies in key European markets has also contributed to slower growth for Tesla in the region.
In the U.S., Tesla continues to lead the electric vehicle market, but rivals are closing in. Legacy automakers like Ford and General Motors have made strides in their EV offerings, although their overall electric vehicle sales remain modest compared to Tesla's. General Motors reported a 60% increase in EV sales for the third quarter, though it still only sold 32,100 units, a fraction of Tesla's output. Ford, another major competitor, is expected to report its results soon, and Rivian, an up-and-coming player, continues to mature in the EV space.
Tesla's lower-than-expected deliveries have raised concerns about the company's ability to maintain its meteoric growth, particularly as it continues to cut prices to stay competitive. The price cuts, while aimed at driving demand, have squeezed Tesla's profit margins, and this will likely be a key focus for investors when the company releases its third-quarter earnings report later this month.
Despite these challenges, Tesla remains a dominant force in the U.S. market, far outpacing competitors. According to recent data, Tesla still sells more battery electric vehicles in the U.S. than any other automaker, with Hyundai trailing as a distant second. However, Tesla's brand has been under scrutiny in the U.S., partly due to CEO Elon Musk's controversial behavior and public comments. Musk, who has made headlines for his political endorsements and inflammatory remarks on his social media platform X (formerly Twitter), has been a polarizing figure, drawing criticism from various corners, including the White House.
Tesla's brand reputation and Musk's leadership style may be impacting the company's U.S. sales, but the automaker continues to push forward with ambitious plans. On October 10, Tesla is set to host a highly anticipated event where it is expected to unveil its robotaxi product, showcasing its strategy to transition towards autonomous driving technologies. This event could signal a pivotal shift for the company, as Musk has long promised self-driving cars but has yet to deliver a commercially viable product. Meanwhile, competitors like Waymo and Pony.ai have already launched commercial robotaxi services.
Tesla's future growth will depend heavily on its ability to balance innovation with market realities. While it leads the global EV market, the landscape is changing rapidly. In China, Tesla is facing pressure from local competitors who are benefiting from subsidies and growing domestic demand. In Europe, Tesla's market share is being squeezed by established automakers. In the U.S., while still the leader, Tesla's growth is being challenged by both legacy automakers and newcomers.
