Tesla posts record vehicle deliveries but price cuts fail to supercharge sales

Tesla on Sunday posted record quarterly vehicle deliveries, but quarter-on-quarter sales growth was modest despite price cuts as rising competition and a bleak economic outlook weighed.

The electric carmaker delivered 422,875 vehicles for the first three months of this year, up 4% from the previous quarter. This was 36% higher than a year ago. In January, the chief executive, Elon Musk, said Tesla could achieve 2m vehicle deliveries this year, up 52% from last year.

Investors have been watching Musk’s gamble that cutting prices would stimulate sales, although they worry about eroding profit margins.

In January, Tesla slashed prices globally by as much as 20%, unleashing a price war after missing Wall Street delivery estimates for 2022. The basic Model Y that used to sell for $65,990 (£53,500) now costs $54,990.

“If they wouldn’t have done the price cut, it would have been ugly. I think what it tells you is the economy is getting tough,” said Gene Munster, the managing partner at Deepwater Asset Management.

“They showed an acceleration, but they didn’t accelerate to the level that Elon had suggested it would.”

Musk, who has missed his own ambitious sales targets for Tesla in recent years, said in January that 2023 deliveries could hit 2m vehicles, without external disruption, from 1.3m in 2022.

Analysts expected 430,008 vehicle deliveries, according to Refinitiv.

Tesla delivered 6% more of its mainstay Model 3/Model Y vehicles in the first three months of this year than in the previous quarter. But the number of deliveries for its higher-priced Model X/Model S vehicles slumped by 38%.

The automaker ramped up production at new factories in Texas and Berlin, and as China production recovered from a Covid-19 lockdown hit. Tesla tweeted on Sunday that its Texas factory built 4,000 Model Y vehicles this week, while the automaker said in late February that its German plant was producing 4,000 cars a week.

Barclays analyst Dan Levy said Tesla may be pressured to lower prices further as many carmakers have matched the cuts amid persistent concerns over a weakening global economy.