Tesla’s US car sales slump nearly 40%

Tesla’s third-quarter revenue tumbled 39% in the US, its first drop in more than two years, but sales in China and other regions surged, the electric car maker’s break down of sales by geography have shown.

US sales, which account for the biggest share of the company’s total revenue, fell to $3.13bn (€2.82bn) from $5.13bn a year earlier. The fall sent Tesla’s share price reeling by more than 3%.

Sales in China rose 64% to $669m and its other segment, which covers the rest of the globe, rose by more than $1bn to $1.83bn, a regulatory filing showed.

“Musk and co are laser-focused on Europe and China for growth, while domestically, core demand is fading relative to other regions,” Wedbush analyst Dan Ives said, adding that US growth will remain more challenging going forward.

In its earnings report earlier this month, Tesla reported a nearly 8% drop in total revenue to $6.3bn, missing analysts’ average estimate of $6.33bn. It did not break down sales by geography in the report.

The company, however, surprised investors with a quarterly profit, making good on chief executive Elon Musk’s promise, as it delivered a record 97,000 cars.

The company has said it plans to deliver 360,000 to 400,000 vehicles for all of 2019, and that it was “highly confident in exceeding 360,000 deliveries this year.”

The drop in sales in its domestic market in the latest reported quarter compares with a 55% rise in the second quarter ended June.

Tesla did not comment on the reason for the fall in the US market.

Tesla is expanding its service in other markets including China and Europe, as Mr Musk is under pressure to make Tesla sustainably profitable, while still spending on major initiatives ranging from a Shanghai factory and assembly-line to upcoming models such as the Model Y SUV and a Semi commercial truck.

The company forecast capital expenditure to be slightly below $1.5bn in 2019.

In the filing, Tesla also said it had a provision for warranty of $138m in the third quarter versus $187m last year.

The filing shows warranty adjustments and other one-time items are a large driver of perceived strength, Roth Capital analyst Craig Irwin said, who downgraded stock to “sell” from “neutral”, adding that he sees margins as unsustainable.

Volkswagen this week said it is ramping up production of electric cars to around one million vehicles by the end of 2022, enabling the German carmaker to leapfrog Tesla and making China the key battleground.

- Reuters