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Even as Wall Street lowered its forecasts, Tesla delivered fewer new vehicles than expected in its latest quarter as planned factory closures limited production and demand for electric vehicles fell amid high interest rates.
The U.S. electric car maker said on Monday it delivered 435,059 vehicles in the third quarter, below the 440,000-455,000 vehicles most analysts had expected. Although vehicle deliveries fell by more than 31,000 vehicles compared with the second quarter of 2023, this number still increased by 27% compared with the same period last year.
Tesla said last quarter’s decline “was due to planned factory upgrade shutdowns, as discussed on its recent earnings call.” The company added that it still expects full-year deliveries to be 1.8 million vehicles, calling for fourth-quarter deliveries to rebound to around 475,000 vehicles.
The impending revamp of the Model 3, as well as plans to launch Tesla’s long-awaited electric pickup truck (Cybertruck) this quarter, led the company to pause production in the latest quarter to reorganize. However, as high interest rates have impacted demand for electric vehicles, some analysts have also cut their forecasts over concerns about weak demand.
Tesla managed to boost sales earlier this year by cutting prices, albeit at the cost of eroding its industry-leading profit margins. The company’s gross margin fell to 18.2% in the second quarter, down 8 percentage points from the year before, even as the company’s stock has more than doubled this year on hopes that the company can weather it better than its rivals. Difficult economic times.
Production fell to 430,488 units in the latest quarter, down 10% from the second quarter. The scheduled production pause paves the way for Tesla to update its model lineup for the first time since the launch of the Model Y more than three years ago. Chief Executive Musk said during the company’s last quarter earnings call that demand for the long-awaited Cybertruck is “so high that you can’t even see it.”
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