Tesla’s sales growth had largely disappeared over the last year and a half. However, the company just registered its best quarter of deliveries ever. This surge was largely driven by buyers rushing to take advantage of the $7,500 federal EV tax credit before it expired.
Tesla delivered 497,099 vehicles over the last three months. That figure represents a massive 29 percent jump from the second quarter and about a 7 percent increase over the same period last year. It is also more vehicles than Tesla has ever delivered in a single quarter.
Other automakers in the United States saw similar jumps ahead of the credit expiring. The temptation to take advantage of the expiring credit was so strong that Cox Automotive forecasted EVs would represent 10 percent of all vehicle sales in the United States for the quarter, which would be a record.
This boost in sales came at a critical time for Tesla. Before the third quarter bump, Tesla was on track to see its global deliveries fall for the second straight year. That decline has eaten into the company’s industry-leading profit margin.
This situation is due to a combination of factors. The company has not released a truly new model in years aside from the Cybertruck, which has been such a bust that it has been outsold by the GMC Hummer EV.
Tesla CEO Elon Musk also tarnished his company’s image by spending hundreds of millions of dollars to help elect Donald Trump. He then promptly joined the new administration and led major, often haphazard cuts to federal agencies and programs with his Department of Government Efficiency.
It is still possible for Tesla to deliver more cars this year than last. But it will take a monster fourth quarter the likes of which Tesla has yet to achieve. Even if that happens, it is a far cry from the 50 percent annual growth figure that the company once promoted.
Perhaps that is unsurprising given that Musk seems to be tired of selling cars. The company is trying to focus the public’s attention on technologies like autonomy and humanoid robotics. This shift is evident as it recently proposed a $1 trillion pay package for Musk, largely tied to the success of those programs.
What happens to Tesla’s sales moving forward is a mystery. The expiration of the tax credit, plus the Trump administration’s stance on clean energy, has dimmed the near-term prospects for EVs in the United States. This has contributed to many major legacy automakers delaying or canceling plans for new electric vehicles, which could paradoxically help Tesla claw back market share.
Tesla is also developing a lower-cost version of its Model Y SUV that we are likely to learn more about by the end of this year. While it is not an entirely new nameplate, the EV is expected to cost in the low-$30,000 range. The question will then be whether that price becomes attractive enough to win buyers for a super stripped-down version of a Tesla.
Meanwhile, other major automakers saw EV sales double in the face of the expiring tax credit. Some, like Ford and General Motors, have said they will make up for the incentive on certain leases going forward as they try to keep their electric vehicles competitive in a market without federal subsidies.