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Tesla (TSLA) released its Q2 deliveries and production numbers on Wednesday, July 2. The deliveries, which closely approximate vehicle sales fell 13.5% year-over-year. The decline was higher than the 13% fall in Q1 and was the worst ever for the company.
Tesla’s Q2 deliveries came in at 384,122, which, while below the consensus estimate of 387,000, was better than what many were expecting. For instance, Troy Teslike, who claims to have an average error rate of just 3% in the preceding 12 quarters, put his final estimate at 356,000 on July 1.
Tesla’s Q2 Deliveries Were Not as Bad as Many Feared
However, Tesla’s deliveries were not as bad as many, including me, were expecting. That said, with Tesla facing tougher comps in Q3, the prospects of the Elon Musk-run company posting yearly growth in deliveries look quite bleak. This would mean a second straight year of yearly decline for the company whose CEO once touted a long-term delivery compound annual growth rate of 50%, a goal it has virtually abandoned.
Tesla also looks set to lose its crown as the world’s largest electric vehicle seller. Chinese rival BYD (BYDDY) sold over 300,000 more EVs in the first half despite the first quarter being seasonally weak in China, its biggest market. The gap might be too big for Tesla to fill in the back half of the year, especially as BYD’s global sales continue to soar, coming in at a record high in all months this year.
Tesla’s Energy Business Is Also Sagging
Tesla’s Energy business, which Musk once claimed would be bigger than the automotive business, is also sagging. It deployed 9.6 GWh of energy storage products in the second quarter, which was slightly below the 10.4 GWh it deployed in the first quarter, even as it rose just over 2% on a yearly basis. The number peaked at 11 GWh in Q4 2024 and has since fallen for two consecutive quarters.
Overall, with markets expecting much worse numbers from Tesla, the Q2 delivery numbers provided a sigh of relief, and TSLA stock rose nearly 5% on Wednesday. The next big event for Tesla is the upcoming Q2 earnings, where the company might update its 2025 delivery guidance and also provide an update on the long-awaited low-cost model, which is expected to drive sales.
Meanwhile, amid the slowdown in the automotive business, Tesla (and analysts bullish on the company) have been instead fixated on other aspects of the business. These include autonomous driving and robotaxis in the short to medium term, and robotics over the long term.
To its credit, Tesla did launch the robotaxi service in Austin on June 22. While it wasn’t a perfect launch and videos showed the vehicles breaking traffic laws, inviting an investigation from the National Highway Traffic Safety Administration (NHTSA), it was nonetheless an incremental step forward for the company.
The Political Risk for Tesla Has Never Been Higher
President Donald Trump’s policies were never expected to be pro-electric vehicles (EVs), and EV tax credits now officially seem on their way out. However, his administration previously relaxed crash reporting requirements, which were supportive of autonomous driving and robotaxis. That, however, was in a different era in which Musk was a close ally of Trump.
The political stakes are particularly high for its autonomous driving business. For instance, shortly before Tesla’s robotaxi launch in the state, Texas Governor Greg Abbott signed legislation that effectively gives the state arbitrary powers to revoke the permits of autonomous vehicle operators that are deemed a threat to public safety. Given the feud between Musk and Trump, it wouldn’t be surprising to see the company’s robotaxi operations – which it plans to expand significantly in the coming months – face greater regulatory scrutiny.
Overall, there is still a lot of uncertainty surrounding Tesla, and while the stock could still be a long-term winner if autonomous driving and humanoid operations go as planned, for now, I will refrain from adding to my position in the stock.
On the date of publication, Mohit Oberoi had a position in: TSLA . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
