Tesla announced a 13.5% decrease in second-quarter delivery numbers on Wednesday because of increasing market competition and negative public perception of CEO Elon Musk. The electric vehicle manufacturer delivered 384,122 vehicles throughout the quarter which represented a decrease from 443,956 units during the previous year.
The market reacted positively to Tesla’s results which exceeded analyst expectations despite a 3% increase in stock price during early trading. The market projections for the quarter spanned a wide range with the lowest estimates reaching below 360,000 units. The market showed positive reactions because the results exceeded the worst-case expectations according to Morningstar analysts.
The company faces difficulties because of negative public reaction in the United States and Europe toward Musk’s political statements and his close ties with President Donald Trump. The company’s vehicle lineup faces obsolescence despite receiving a new version of the Model Y during this year. The Model Y redesign resulted in short-term production interruptions which delayed customer acquisition of the vehicle.
The EV market expansion faces challenges because Tesla experiences both brand deterioration and declining market position. The EV business generates most of Tesla’s revenue and valuation while Musk plans to use robotaxis in the future so the recent delivery decline creates additional concerns. The stock price of Tesla has decreased by 25% throughout the entire year.
