Tesla's Q2 Deliveries Set To Drop Again, But Numbers Are Certainly Not The Biggest Crisis

On Wednesday, Tesla is expected to release its second-quarter vehicle delivery and production figures. Against the backdrop of Elon Musk's polarizing political stance and intensifying market competition, Wall Street widely anticipates another quarterly decline in deliveries.

While Tesla's recent stock rebound has been fueled by investor optimism over its commercialized Robotaxi ambitions, the company's core revenue and profits still rely heavily on electric vehicle (EV) sales, a segment now under pressure from high interest rates and mounting competition.

Although the global EV market continues to grow (albeit at a slower pace than in previous years), Tesla's aging vehicle lineup saw its first annual sales drop in 2024. Musk remains confident that sales will rebound in 2025, but analysts project an 8% decline this year.

Turning to Q2 data, a Visible Alpha survey of 23 analysts estimates Tesla will deliver 394,380 vehicles, marking an 11% year-over-year drop, following a 13% decline in the previous quarter.

Tesla has attributed the sales slump to the paused production of certain models as it transitions to an updated version of its best-selling Model Y SUV. Analysts note that many customers are holding off on purchases in anticipation of the refreshed model.

Ross Gerber, CEO of Gerber Kawasaki Wealth & Investment Management and a long-time Tesla investor, said: "I think a lot of analysts were thinking this quarter would have a bump positive because of the new Model Y, but the new Model Y in my mind isn't such a departure from the old Model Y." He suggests the demand did not meet expectations.

Instead, Tesla is selling fewer cars, partly due to Musk's public endorsement of far-right European parties and his role in President Trump's administration, where he oversaw federal job and funding cuts, alienating some potential buyers.

Despite Musk refocusing on Tesla's operations, the lingering backlash—coupled with consumers opting for cheaper Chinese EVs—has led to five consecutive months of declining Tesla sales in Europe. Data from the European Automobile Manufacturers' Association shows a 27.9% drop in May.

In China, Tesla's EV market share has shrunk from 10% last year to 7.6% today, far below its 15% peak in 2020. Last week, Xiaomi's SU7 sedan received overwhelming pre-orders within hours, sparking speculation that Tesla may need to slash prices to compete.

A “Record-Breaking” Challenge Ahead

Sam Fiorani, VP of AutoForecast Solutions, warned: "Lagging sales in Europe compared to the rest of the EV market and the increasing competition in China are both working against Tesla going forward."

According to Wall Street analysts, Tesla must deliver over 1 million vehicles in the second half of 2024 to meet Musk's growth target—a record-breaking challenge.

Tesla's stock, which plunged earlier this year amid anti-Musk protests, has recently rebounded. Last month, the company finally unveiled its long-awaited Robotaxi in Austin, Texas, launching a limited pilot program.

However, fresh tensions between Trump and Musk over tax and spending bills triggered a 5% pre-market drop in Tesla shares on Tuesday.

Musk vowed to support primary challenges against any lawmaker who votes for the bill and announced plans to launch a new "America Party" the following day. In response, Trump suggested the Department of Government Efficiency (DOGE) should "take a hard look" at Tesla's government subsidies.

Notably, under Trump's Big Beautiful Bill, EV tax credits for some automakers will expire by the end of 2025, with others ending in 2026. The phase-out could further disadvantage Tesla.