Tesla, impacted by a major downturn earlier this year, is showing potential signs of recovery. In the three months ending on June 30, the electric car company led by Elon Musk delivered nearly 444,000 vehicles, marking a 14% increase from the previous quarter. Although this figure exceeded analysts' expectations, it still represented a nearly 5% decline from the same period in 2023.
Tesla has faced a slowdown in demand due to high borrowing costs and growing competition. In response, the company has repeatedly reduced prices and introduced low-cost borrowing plans to attract buyers, though with limited success. Despite announcing a 10% workforce reduction in April, Tesla experienced a sales decline in the first half of the year. Earlier in the year, the company attributed its poor performance to supply shortages caused by shipping disruptions in the Red Sea and an alleged arson attack at its factory in Germany.
Analysts suggest Tesla needs to update its product line to prevent competitors from gaining market share. While Tesla began selling its cyber-truck last year, it remains a minor part of its business, and the mainstream Model 3 sedan has been on the market since 2017.
Elon Musk, who recently secured shareholder approval for a record-breaking $50 billion pay package, envisions a promising future for Tesla driven by self-driving technology and automation. Despite concerns about weaker-than-expected demand for electric vehicles in the US, the global market for electric cars is still expanding. The International Energy Agency (IEA) predicts that more than one in five cars sold globally this year will be electric, with nearly half of those sales occurring in China and about a quarter in Europe.
Wedbush Securities analyst Dan Ives believes Tesla's worst period is over, citing improvements in China where the government is incentivizing trade-ins of older cars to boost the industry. Ives noted that while Tesla has undergone significant cost reductions to maintain profitability, the outlook appears positive. He expects Tesla's upcoming August presentation on robotaxis to spur new growth. Following this optimistic news, Tesla's shares rose more than 6% in morning trading on Tuesday.