Tesla sales slump in the US, jump everywhere else
US electric car maker posts weak domestic sales, but global strategy bears fruit
US sales of Tesla cars fell by nearly 40 per cent in the last quarter, slumping to $3.13 billion (£2.4 billion €2.78 billion). This compares to sales of $5.13 billion in the same period last year.
The slump in revenues comes despite Tesla shipping more cars than expected, with global deliveries rising 1.9 per cent to 97,000 vehicles. However, much of this growth was fuelled by sales of the cheaper Model 3, which delivers lower profit margins than the pricier Model S and Model X.
It wasn’t all bad news, however. While the US remains by far the largest market for Tesla at the moment, the company has been actively pursuing global expansion. That strategy is paying off, with sales in China - Tesla’s second biggest market - rising 64 per cent to $669 million. Sales to its other segment - which covers the rest of the world - rose by over a billion dollars in the same period.
Tesla surprised investors earlier in the week by posting a solid profit for the third quarter of 2019, despite the growing influence of cheaper models in its sales mix. Tesla generated $6.3 billion of revenue last quarter, with an operating profit of $261 million. It said the growth was driven by manufacturing efficiencies and what it called “commercial negotiations with suppliers’.
Some analysts question whether Tesla’s margins are sustainable, and analysts at Roth Capital downgraded the stock to Sell,stating that third-quarter results were boosted by aggressive cost-saving measures and one-time items (like warranty adjustments), rather than car sales. Tesla shares, listed on Nasdaq, closed down 3.51 per cent.