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Tesla (NYSE: TSLA) will release its Q2 delivery estimates next week. Several analysts have trimmed Tesla’s delivery estimates ahead of the report as multiple data points show weak sales in key markets, including the US.
The current consensus estimates are just under 400,000 units. However, several brokerages have been slashing their estimates, finding the consensus number a little too high. Barclays, for instance, expects Tesla to deliver 375,000 vehicles in Q2, which is 10% lower than the corresponding quarter last year, even as it’s still considerably higher than the 336,000 vehicles that the Elon Musk-run company delivered in Q1.
Brokerages cut Tesla’s Q2 delivery estimates
“We estimate 2Q deliveries of ~375k units, well below consensus of ~400k, and below our published estimate post 1Q EPS back in April,” said Barclays in its note. It added, “The planned launch of a more affordable model in 1H25 could potentially be a catalyst for strong 2H volumes.” Notably, Tesla has talked about the low-cost platform previously also but the model is not expected to enter mass production for at least the next few months. Details are, however, scant about the project, even as Musk dismissed reports that the company has shelved the project.
According to Barclays, “It’s possible Tesla is keeping the new vehicle under wraps as to not cannibalize sales of the recently refreshed Model Y during the end-of-quarter delivery wave.”
Looking at other major brokerages, UBS and RBC Capital expect Tesla’s Q2 deliveries to fall 18% to 366,000 units, while Baird sees the number at 377,000.
Troy Teslike, who claims that his average error rate in the previous 12 quarters is 1.4% for Tesla’s production and 3.0% for deliveries, sees more analysts revising down Tesla’s 2025 delivery estimates over the next few days and believes that Tesla’s deliveries would be below 1.6 million this year. For context, Tesla delivered 1.8 million vehicles last year, which was the first annual sales decline for the company.
TSLA Might Revise Its Guidance
In its Q4 2024 shareholder deck, Tesla said, “With the advancements in vehicle autonomy and the introduction of new products, we expect the vehicle business to return to growth in 2025.” Notably, last year Musk Tesla’s CEO, Elon Musk, said that the company’s 2025 deliveries might rise by as much as 30% as it prepares to launch new vehicles.
It sounded even more circumspect in its Q1 update and said it will “revisit” the guidance in its Q2 update.
Tesla’s Global Sales Have Been Weak
Tesla’s global sales have been quite weak, particularly in China and Europe. The company’s sales from the China Gigafactory have fallen in the first two months of this quarter. The factory produces cars for the domestic Chinese market and also exports to parts of Europe.
While Tesla blamed weak sales in Q1 on the Model Y update, registration data for the first 12 months of Q2 shows the run rate running below even the seasonally weak first quarter.
There is a fierce price war in the Chinese EV market as companies have been cutting prices and offering incentives to spur sales. The Chinese auto market is among the most competitive globally, and domestic players are increasingly taking market share from foreign brands like Volkswagen and Ford. The price war only escalated after BYD cut prices on many of its models, especially those in the budget range.
Xiaomi also looks to increase its market share in China, some of which might come at Tesla’s cost. The company said that its YU7, which would compete with Tesla’s Model Y, received more than 200,000 orders in just three minutes of the launch.
Tesla’s Sales in Europe Have Plunged
Tesla’s sales in Europe fell by over 50% in May, even as it saw an increase in sales in some markets like Norway. Musk’s embrace of right-wing politicians seems to have alienated many potential Tesla car buyers, which is reflected in its falling sales in Europe, where it is fast losing ground to Chinese automakers as well as European auto giants like Volkswagen.
In April, BYD surpassed Tesla in battery electric vehicle (BEV) registrations in Europe for the first time. It was yet another milestone for the Chinese giant after having dwarfed Tesla’s global deliveries in 2022. Last year, BYD surpassed Tesla in terms of total revenues, also.
TSLA’s US Registrations Fell in April
Tesla’s US registrations fell a whopping 16% in April as the country’s electric vehicle (EV) registrations fell for the first time in 14 months. The numbers don’t come as a surprise, as there were signs that Tesla’s sales were weak in the US. In May, the company cut the financing rates for its new Model Y in the US. While it is usual for the company to offer incentives towards the end of the quarter, this time around, it offered the discount just about a month into the quarter, and that too on the latest version of its best-selling vehicle.
Meanwhile, even as Tesla’s automotive business is going through one of its worst slowdowns, some believe that the focus is now shifting to its robotaxi and humanoid business. “The Tesla narrative has increasingly turned to AV/Robotaxi, with investors likely more focused on the planned June 22nd Robotaxi launch and Tesla’s path to scaling AV than on 2Q deliveries/overall fundamentals,” said Barclays in its note.
Tesla launched its robotaxi fleet on Sunday in Austin, and the stock rose over 8% on Monday after what was seen as a successful launch. However, videos posted online showed the robotaxi launch wasn’t as successful, and the vehicles violated some traffic rules.
Moreover, it wasn’t an “unsupervised” vehicle in the strict sense as it not only had a safety driver sitting on the front passenger seat but was also reportedly being remotely monitored to respond to any incident.
TSLA shares have since pared the Monday gains, and all eyes are now on next week’s update, where analysts are now getting increasingly circumspect and see a double-digit yearly decline in deliveries.
