Will Tesla See a Second Consecutive Year of Delivery Decline?

Core Insights - Tesla is experiencing a significant decline in deliveries, with Q1 and Q2 of 2025 showing a year-over-year drop of 13% and 13.4% respectively, leading to concerns about demand rather than supply issues [1][3][12] - The company's Q2 deliveries of 384,122 vehicles fell short of Wall Street expectations of 390,000 units and the internal forecast of 420,000 units [2][12] - Tesla's struggles are not indicative of the overall EV market, as competitors like General Motors and BYD are seeing substantial growth [4][5][6] Delivery Performance - Q2 deliveries were only slightly better than Q1, which was Tesla's worst quarter for deliveries in over two years [2] - Rising inventories, which increased by 50,000-60,000 vehicles in the first half of 2025, highlight a disconnect between supply and demand [7][12] Competitive Landscape - General Motors delivered 46,280 EVs in Q2, more than double its sales from the previous year, capturing a 13% share of the U.S. EV market [5] - BYD outperformed Tesla in Q1 and Q2 of 2025, delivering over 416,000 and 606,993 BEVs respectively, marking a 42.5% year-over-year increase [6] - Other competitors like Volkswagen and Xiaomi are also gaining traction, increasing pressure on Tesla's market share [7] Factors Contributing to Decline - Tesla's aging model lineup, with no major new vehicle introductions in years, is failing to stimulate demand [8] - Increased competition with advanced features and aggressive pricing from rivals is impacting Tesla's sales [9] - Elon Musk's polarizing public persona is affecting consumer perception and choice [10] Future Outlook - Tesla is at risk of delivering fewer vehicles in 2025 than in 2024, potentially marking a second consecutive year of declining sales [13] - Musk has already revised the company's growth target for 2025 from 20-30% to more modest expectations, with further guidance to be provided in the Q2 earnings update [14] - Without significant changes in the second half of 2025, such as new models or price adjustments, Tesla is likely to continue facing delivery declines [15] Stock Performance - Tesla shares have risen approximately 28% over the past year, contrasting with a 5.6% decline in the industry [16] - The company trades at a forward price-to-sales ratio of 9.64, significantly higher than the industry average [17]