Tesla’s Quarterly Deliveries Expected to Increase as China Incentives Attract Hesitant EV Buyers

By Akash Sriram and Abhirup Roy

Tesla is projected to report an 8% increase in third-quarter electric vehicle deliveries, according to Wall Street estimates. This growth is expected to be fueled by extended incentives and attractive financing options in China, which is the world’s largest auto market.

In response to declining consumer spending in China amidst slower economic growth and increased competition from local manufacturers like BYD, Tesla rolled out a variety of promotions this spring. These included insurance offers, discounts on specific paint colors, and zero-interest loans lasting up to five years.

These measures have contributed to a surge in sales during July and August after Tesla experienced two consecutive quarters of declining deliveries. Analysts noted that the upward trend likely continued throughout the quarter, with twelve of them, surveyed by LSEG, anticipating that Tesla will deliver approximately 469,828 vehicles. This figure would represent the company’s strongest third quarter to date, up from around 435,000 vehicles during the same period last year.

Scott Acheychek, chief operating officer of REX Financial, highlighted China as a significant driver of growth, noting that it accounts for one-third of Tesla’s sales.

Deutsche Bank analysts estimated that Tesla would deliver around 139,000 Model 3 sedans, 296,400 Model Y SUVs, a combined 13,350 of its larger Model S sedans and Model X SUVs, as well as about 13,500 Cybertruck pickups in the third quarter.

Additionally, sales in China were enhanced by increased government subsidies aimed at incentivizing consumers to switch from gasoline-powered vehicles to electric alternatives. Furthermore, Tesla vehicles have been approved for government purchasing, with the Model Y SUV being included in a list of cars that can be acquired by government entities for official use.

Ken Mahoney, CEO of Mahoney Asset Management, pointed out that the boost from China, coupled with the benefits of a recent interest rate cut by the U.S. Federal Reserve, could enable Tesla to reach its record goal of delivering 1.8 million vehicles in 2023.

Earlier this year, Musk stated that Tesla was on track for higher delivery numbers in 2024. The company began delivering the Cybertruck late last year and aims to increase production to 250,000 units next year, though official production or delivery figures for this model have yet to be announced.

With demand for electric vehicles in the U.S. slowing and a lack of subsidies in Europe, Tesla delivered about 831,000 vehicles in the first half of the year. To avoid a decline in 2024 deliveries, it would need to achieve roughly 979,000 vehicles in the latter half of the year.

This metric will be crucial for reassuring investors about future electric vehicle demand, especially as attention turns to Tesla’s upcoming unveiling of a robotaxi product on October 10. This marks a significant pivot in the company’s strategy following the abandonment of its affordable car initiative, a change that some believe could unlock substantial value for Tesla.