All the Teslas that are out and about these days are enough to give one a feeling that there is no end to the market for the most-identifiable of electric cars.
However, in the U.S. at least, Tesla’s auto sales during the third quarter quarter took a big hit, falling by more than $2 billion, or 36% from a year ago, to $3.13 billion. Tesla revealed its U.S. sales, along with those of its other major international markets, in a filing with the U.S. Securities and Exchange Commission on Tuesday.
The U.S. is still, far and away, Tesla’s biggest geographical region in terms of auto sales, and accounted for almost half of the company’s third-quarter sales of $6.3 billion. But, while a $2 billion drop is no small amount, is it that big of a deal for Tesla?
Not necessarily, say analysts that follow Tesla and all of machinations its Chief Executive Elon Musk is using to expand Tesla’s reach into international markets.
“Musk and company are laser focused on Europe and China for growth while domestically core demand is fading relative to other regions,” said Dan Ives, managing director with Wedbush Securities. “The U.S. was the first chapter of the Tesla growth story, and now all eyes are on Europe and China as the fuel in the engine for Tesla going forward.”
That can be seen in the sales Tesla recorded for its regions outside the U.S.
During the third quarter, which ended September 30, Tesla’s auto sales in China rose by 64%, to $669 million. Tesla must have a strong foothold in the Netherlands and Norway, because the company also broke out sales for those two areas. Tesla’s Netherlands auto sales climbed by 56%, to $427 million, while auto sales in Norway rose by almost 13%, to $253 million.
Tesla’s auto sales in the rest of the world more than doubled, to $1.83 billion.
While Tesla’s U.S. sales fell dramatically, analysts said they weren’t too surprised by the drop. Last year, as Tesla was ramping up in China, and getting ready to sell the Model 3 in the country, Tesla pumped up U.S. demand by playing upon buyers’ fears of missing out on the maximum federal tax credit they could get for purchasing an electric car.
That tax credit, which was $7,500, was cut in half to $3,750 by the end of 2018 due to a federal timeline for phasing out the benefit. The credit is now at $1,875 and is set to disappear by the end of the year.
“They used to have very little export business a year ago, and had a lot of U.S. demand front-loaded into the third and fourth quarters a year ago,” said Joseph Osha, of JMP Securities. “They are now indicating the extent to which they need these markets outside the U.S. if they want to continue to grow.”
Tesla didn’t return a request for comment on its U.S. auto sales.
In early October, Tesla said it delivered, or sold, 97,000 vehicles worldwide during the third quarter. The company maintains it is on track to deliver at least 360,000 cars for all of 2019.