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Tesla sales rose a better-than-expected 10 percent in the second quarter as the company led by Elon Musk benefited from government incentives and price cuts that made its electric cars less expensive than comparable gasoline models.
Tesla delivered 466,000 vehicles from April through June, up from 423,000 vehicles in the previous quarter, the company said on Sunday. Compared with a year earlier, sales in the second quarter rose 83 percent as the company expanded production at new factories in Austin, Texas, and near Berlin.
The sales figures exceeded estimates by Wall Street analysts and showed that Tesla was able to overcome the effect of higher interest rates, which raise monthly payments for people who buy cars on credit.
Tesla was the first of the automakers to report its sales numbers. Sales of most major car brands probably rose sharply in the last quarter, analysts say. Supply chain issues have improved, making it easier for carmakers to get the components they need and for buyers to find the cars they want. Analysts at Cox Automotive forecast that U.S. new vehicle sales will rise more than 8 percent this year from 2022.
Rules that took effect this year allowed buyers of Tesla vehicles to qualify for $7,500 in federal tax credits. With the credit, the least expensive Model 3 sedan sells for less than $33,000, cheaper than similar luxury sedans sold by Mercedes-Benz and BMW that run on gasoline and in line with mass market cars like the Toyota Camry and Honda Accord.
Owners of electric cars also benefit from fuel savings and lower maintenance costs. Electric vehicles don’t require oil changes, and electricity is generally cheaper per mile than gasoline.
Tesla is the dominant maker of electric cars in the United States, with a market share of 62 percent in the first quarter, according to Kelley Blue Book. But its share has slipped from more than 70 percent at the beginning of 2022 as established automakers like General Motors, Ford Motor and Volkswagen have begun offering more electric models.
In China, a bigger car market than the United States or Europe, Tesla faces intense competition from local manufacturers that have newer model lineups, like BYD. On average, electric vehicles by Chinese manufacturers have been in showrooms a bit more than a year, according to AlixPartners, a consulting firm. Tesla’s most popular car, the Model Y sport utility vehicle, went on sale in 2020.
Chinese manufacturers also offer interior and exterior styling and entertainment and information systems that better cater to local tastes, AlixPartners noted, citing consumer surveys.
While Tesla sales have continued to climb, the company’s profitability has suffered because it has had to cut prices to prop up demand. Tesla made $2.5 billion in the first quarter, down from $3.7 billion in the last three months of 2022.
Many investors are betting that Tesla’s growth will accelerate as demand for electric vehicles grows, and the company begins selling the Cybertruck, an electric pickup truck, later this year. Tesla’s agreement to let other carmakers, including Ford and G.M., use its charging network could also become a new source of revenue.
Tesla’s share price has more than doubled this year although it remains well below its peak in 2021, when the company was worth more than $1 trillion.
The carmaker said on Sunday that it would publish its financial results for this year’s second quarter on July 19.