Tesla Sales Slow as the Pandemic Hobbles Production

Tesla said Saturday that vehicle deliveries from April through June fell 18 percent from the first quarter of the year, a rare slowdown for the company caused by production problems in China.

Tesla sells more electric cars than any other company and, until recently, was expanding rapidly in China, Europe and the United States as the rising price of gasoline increased the appeal of battery power. Other carmakers envied Tesla’s growth rate.

Tesla delivered more than 254,000 vehicles in the quarter compared with 310,000 in the first quarter. It was the first quarterly decline in deliveries since the beginning of 2020, when the onset of the pandemic undercut car sales worldwide.

Tesla’s sales would probably have been even higher if not for shutdowns and supply chain problems, related to the pandemic, that hobbled operations at the company’s factory in Shanghai. China has the world’s largest car market and accounts for about 40 percent of Tesla sales.

Production in China was “an absolute disaster in the months of April and May,” Daniel Ives and John Katsingris, analysts at Wedbush Securities, said in a note to investors this past week.

Tesla suggested that it had overcome the production problems, saying that it built more cars in June than ever in its history.

Tesla has more orders than it can fill, but demand could slow if the global economy hits a speed bump. Elon Musk, Tesla’s chief executive, warned in an interview with Bloomberg News in June that a recession was “inevitable at some point” and that “more likely than not” it would come soon. He has told staff that the company will cut 10 percent of its salaried work force.

Tesla appears unlikely to match its growth from last year, when deliveries rose 90 percent to 940,000 cars. A 50 percent increase for 2022 is more realistic, the Wedbush analysts said.

That, they said in a note on Saturday, is still “an impressive feat” considering that China was “essentially shut down for two months.”

The slower growth rate is one factor that has caused investors to reassess Tesla’s chances of dominating the car business. Tesla shares have fallen more than 40 percent from their peak in November, even as more and more buyers choose electric cars because of their superior energy efficiency.

Depending on local utility rates, an electric car costs significantly less to operate than a fossil-fuel vehicle. A Tesla Model 3 standard range gets the equivalent of 142 miles to the gallon and costs $450 per year to fuel, according to the Environmental Protection Agency. By comparison, a Honda Accord with a gasoline engine gets 33 miles to the gallon and costs $2,200 per year to fuel.

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