Tesla’s U.S. sales plunge 39% for the third quarter as Elon Musk puts more emphasis on selling the cheaper Model 3
- Tesla’s third-quarter revenue tumbled 39% in the US, filing revealed on Tuesday
- However, sales in China and other regions surged for the electric car maker
- Musk has vowed to deliver 360,000 to 400,000 vehicles for all of 2019
- Tesla said it was ‘highly confident in exceeding 360,000 deliveries this year’
Tesla’s third-quarter revenue tumbled 39 percent in the United States, its first drop in more than two years, but sales in China and other regions surged, the electric car maker’s break down of sales by geography showed on Tuesday.
U.S. sales, which account for the biggest share of the company’s total revenue, fell to $3.13 billion from $5.13 billion a year earlier.
The company says that pricing changes and a dramatic increase in leasing were to blame for most of the decline in revenue.
Sales in China rose 64 percent to $669 million and its other segment, which covers the rest of the globe, rose by more than a billion dollars to $1.83 billion, a regulatory filing showed.
Tesla CEO Elon Musk has vowed to deliver 360,000 to 400,000 vehicles for all of 2019
Tesla has increased sales of its cheaper Model 3, which retails for $35,000, while unit sales of the more expensive Model X ($81,000) and Model S ($75,000) have dipped.
But as it strives to gain market share with the more affordable Model 3, Tesla has been plagued by concerns over safety and reliability, most recently after introducing new ‘Smart Summon’ features that drive the car across a parking lot to waiting owners.
Videos posted online showed awkward instances of the feature causing Teslas to nearly bump into other cars or crash into obstacles.
In its earnings report earlier this month, Tesla reported a nearly 8 percent drop in total revenue to $6.30 billion, missing analysts’ average estimate of $6.33 billion, according to IBES data from Refinitiv. It did not break down sales by geography in the report.
The company, however, surprised investors with a quarterly profit, making good on Chief Executive Officer Elon Musk’s promise, as it delivered a record 97,000 cars.
The company has said it plans to deliver 360,000 to 400,000 vehicles for all of 2019, and that it was ‘highly confident in exceeding 360,000 deliveries this year.’
The drop in sales in its domestic market in the latest reported quarter compares with a 55 percent rise in the second quarter ended June.
A Tesla Model 3 is seen in the general assembly line at the Tesla factory in Fremont, California
‘The 40 percent drop in sales shows there is a ton of work to do to meet guidance,’ Roth Capital analyst Craig Irwin said.
Tesla is expanding its service in other markets including China and Europe, as Musk is under pressure to make Tesla sustainably profitable, while still spending on major initiatives ranging from a Shanghai factory and assembly-line to upcoming models such as the Model Y SUV and a Semi commercial truck.
The company’s shares dropped 3.5 percent to $3.16.22 on Tuesday.
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