Tuesday, December 17, 2024

As Tesla sales increase, demand for electric cars is rising again

Tesla said on Wednesday that global sales of cars and trucks rose 6.4 percent in the third quarter, a sign that demand for electric cars may be recovering due to the company’s reported first-quarter increase this year and lower interest rates.

The automaker delivered 463,000 vehicles from July to September, up from 435,000 a year ago, giving investors confidence that the company’s sales have stabilized after falling in the first half of the year.

The sales data fell short of Wall Street analysts’ expectations, sending Tesla’s stock price down about 5 percent on Wednesday morning.

Tesla boosted sales in part by offering qualified buyers in the U.S. 2.5 percent financing, well below the market interest rate. After the Federal Reserve cut interest rates by half a percentage point in September, the Elon Musk-led company will find it easier to provide cheap financing. Central banks in Europe, China and elsewhere are also cutting rates.

Interest rates determine the amount of monthly car payments and are more important to buyers than sticker prices. That’s why many analysts believe that car sales, especially in the U.S., could rise as the Fed cuts rates.

“There’s a group of people who are going to say, ‘Now is not the time to pay $50,000 for a new vehicle,'” said Charles Chesbro, senior economist at research firm Cox Automotive. They may decide to wait months.”

Tesla’s share of electric car sales has declined as rivals such as General Motors, Hyundai, Ford Motor and BMW offer more battery-powered models. But Tesla still accounts for nearly half of electric car sales in the U.S. and sets the tone for the market here and elsewhere.

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Sales of electric cars, while still growing, have fallen short of expectations and prompted GM, Ford, Volvo and other companies to scale back or reduce investment in electric vehicle production. A rebound in Tesla’s sales could mean faster growth in electric models, a pillar of the Biden administration’s efforts to fight climate change.

On Tuesday, GM said sales of its electric models in the U.S. rose 60 percent from a year earlier to more than 32,000 units in the third quarter. U.S. sales of all of the company’s vehicles fell about 2 percent in the quarter.

Ford on Wednesday reported a 12 percent increase in U.S. electric vehicle sales in the third quarter to about 23,500, and a 0.7 percent increase in overall car and truck sales.

Tesla still faces significant challenges and questions about its strategy. The company’s sales have rebounded in China, the world’s largest car market. But the Chinese auto market is highly competitive, and many automakers are losing money or making little profit there.

In Europe, electric vehicle sales are falling after Germany cut subsidies for buyers. Tesla relies on just two cars — the Model Y sport utility vehicle and the Model 3 sedan — for most of its sales, while rivals like GM and Hyundai-Kia offer more choices, new designs and often lower prices.

GM’s best-selling battery-powered model is the new electric version of the Chevrolet Equinox SUVGM sold more than 9,700 in the third quarter, and this week began selling the car’s entry-level model at $35,000, starting at $35,000 before federal and state breaks. The cheapest Tesla Model Y sells for around $45,000 before tax incentives.

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As well as selling overpriced cars, Tesla appears to be struggling because Mr. Musk, who owns social networking site X, and former President Donald J. Trump and his vocal support have alienated many potential buyers with provocative statements. Conservative reasons. Centrist and left-leaning consumers are more likely to buy electric cars than conservatives.

Mr. Musk has staked Tesla’s future on autonomous driving. On October 10, the company plans to release a self-driving taxi, but Mr. Analysts doubt Tesla is as close as Musk claims.

There are speculations that Tesla will also release a cheaper passenger car on the same day to expand the number of people who can afford a Tesla. The company has said it is working on such a product, but has not confirmed when it will show the vehicle this month or when it will go on sale.

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