Tesla Breaks Production Records, But Slower Sales Raise Concerns

Tesla produced a million more units than last year

InsideEV, an electric vehicle media outlet, reported on the 23rd (local time) that Tesla’s annual electric vehicle production is expected to exceed 2.35 million units this year. 

Tesla’s annual production of electric vehicles this year is expected to increase by 325,000 units from the previous quarter (Q2), surpassing a total of 2.35 million units. The production volume 2022 is 1,369,611 units, and if the prediction is correct, the increase in this year’s production volume is expected to be close to a million units.

What is the reason for the increase in Tesla’s production volume?

The reason for the increase in Tesla’s production volume is attributed to the increase in the annual production capacity of Tesla’s Shanghai factory in China by 200,000 units compared to last year and the production volume of the Tesla Cybertruck, which will be launched at the end of November, also increased by more than 125,000 units. Tesla’s Q3 production volume increased by 18% from the previous year to 434,880 units. It is interpreted that this will be enough to achieve the annual production target of 1.8 million units this year. 

However, according to the analysis, it is too early to be relieved only by the green light in this part of the production volume.

The slowdown in European sales, Q3 net profit, and U.S. market share

On the 23rd, the European Automobile Manufacturers Association announced that Tesla’s European sales decreased by 19.2% to 34,080 units compared to the same month last year. This was a dismal result, even after offering a discount promotion of up to $20,000, approximately 26 million won, to avoid being chased by China’s BYD. Moreover, compared to the previous Q2 sales of about 455,000 units, Q3 sales decreased by about 20,000 units to 435,059 units, falling short of market expectations.

Moreover, a red light came in the market share they tried to conquer by reducing net profit. According to market research firm Cox Automotive, the Q3 U.S. market share was 50%, rapidly declining from the previous 65%. On the other hand, competitors saw sales increase as much as three to four times.

Is the game changer the Cybertruck?!

Musk needs to sell nearly 670,000 units for the rest of this year to achieve the annual growth rate of 50% he is aiming for. Looking at the Q3 trend, it doesn’t seem easy to accomplish this by relying on existing models that expect a sales volume of 400,000 units.

Even if we add the production volume of the Cybertruck we looked at earlier, 125,000 units, it seems difficult to achieve. The initial delivery volume of the Cybertruck at the end of November is expected to be at the level of 2,000 to 4,000 units, making it difficult to have high expectations for sales volume.

The year is not over yet

However, there are arguments that it is too early to be discouraged. Since the Cybertruck, which started taking pre-orders at the end of 2019, has exceeded 200,000 reservations, there is an argument that there will be no problem if it is produced on time this year.

In response to mixed reactions of concern and expectation, Tesla said during the Q3 announcement, “The Cybertruck is a great product, but it will take at least one year to 18 months to make a significant positive financial contribution“, urging restraint on excessive expectations.

By. Park Seo Joon