Tesla quarterly deliveries seen falling again
Demand weak in Europe, China amid competition, Musk backlash
Analysts expect sales to fall 8% in 2025
By Akash Sriram and Abhirup Roy
July 1 (Reuters) - Tesla is expected to report another fall in quarterly deliveries on Wednesday as the backlash against CEO Elon Musk's political views and competitive pressures continue to drag on demand.
While much of Tesla's trillion-dollar valuation hangs on Musk's bet on commercializing robotaxis, most of the company's current revenue and profits come from its core business of selling electric vehicles - one that has been under pressure due to high interest rates and rising competition.
The global EV market has been growing, albeit at a slower pace than in previous years, but annual sales of Tesla's aging lineup fell for the first time in 2024. While Musk has said sales will return to growth in 2025 - a pullback from his earlier promise of 20-30% growth - analysts expect an 8% sales decline this year.
For the second quarter ended June, Tesla is expected to deliver 394,380 units, according to 23 analysts polled by Visible Alpha. That would be a drop of more than 11% year-over-year, and would follow a 13% decline the company reported in the previous quarter.
Tesla has said the fall last quarter was due to a pause in production to shift to a refreshed version of its best-selling Model Y SUV, and analysts had said many customers were delaying purchases as they waited for it to roll out.
"I think a lot of analysts were thinking this quarter would have a bump positive because of the new Model Y," said Ross Gerber, CEO of Tesla investor Gerber Kawasaki Wealth and Investment Management. "But the new Model Y in my mind isn't such a departure from the old Model Y," he said, adding that demand for the model did not live up to expectations.
Instead, people bought fewer Tesla vehicles. Some prospective buyers were irked by Musk's public embrace of far-right politics in Europe and work for U.S. President Donald Trump overseeing cuts to federal jobs and funding.
Though Musk has shifted his focus back to his companies, the backlash, along with customers choosing cheaper Chinese EVs, led to the fifth straight month of falling sales for Tesla in Europe, with a 27.9% drop in May, data from the European Automobile Manufacturers Association showed.
In China, Tesla's share of the EV market has fallen to 7.6% for the first five months of 2025, from 10% last year and a peak of 15% in 2020, as competitors won over consumers with snazzy, new, feature-packed EVs. Xiaomi's YU7 SUV received exceptionally strong orders hours after going on sale last week and fanned speculation that Tesla may have to cut prices to fight back.
"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," said Sam Fiorani, vice president at research firm AutoForecast Solutions.
To achieve Musk's target of returning to growth this year, Tesla - if those second-quarter estimates are accurate - would need to hand over more than a million units in the second half, which would be a record and a tough challenge, according to Wall Street analysts, although typically sales are stronger in the latter half.
Some help could come from Tesla's planned cheaper model - expected to be a stripped down Model Y - that the company has said it will start producing by June end. Reuters reported in April it would be delayed by at least a few months.
After tanking early this year amid angry anti-Musk protests, Tesla shares have regained some ground recently. Last month, the company rolled out about a dozen robotaxis in a limited part of Austin, Texas, ferrying a small group of invited fans for a nominal fee but with a safety monitor and other restrictions.
(Reporting by Akash Sriram in Bengaluru and Abhirup Roy in San Francisco, Editing by Rosalba O'Brien)
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