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Tesla’s sales rise as tax credits fuel demand




Tesla sales rose 10 percent better than expected in the second quarter as the company led by Elon Musk took advantage of government incentives and price cuts that made its electric cars cheaper than comparable gasoline models.

Tesla delivered 466,000 vehicles from April to June, up from 423,000 vehicles in the previous quarter, the company said on Sunday. Compared to a year earlier, sales in the second quarter increased by 83 percent as the company expanded production at new factories in Austin, Texas and near Berlin.

The sales figures beat estimates by Wall Street analysts and showed that Tesla was able to overcome the effects of higher interest rates, which increase monthly payments for people who buy cars on credit.

Tesla was the first of the car manufacturers to report its sales figures. Sales of most major car brands probably rose sharply in the last quarter, say analysts. Supply chain issues have improved, making it easier for automakers to get the components they need and for buyers to find the cars they want. Analysts at Cox Automotive predict that sales of new cars in the United States will increase by more than 8 percent this year from 2022.

Rules that went into effect this year allowed buyers of Tesla vehicles to qualify for $7,500 in federal tax credits. With the honor, the cheapest Model 3 sedan sells for less than $33,000, cheaper than similar luxury sedans sold by Mercedes-Benz and BMW that run on gas and in line with mass-market cars like the Toyota Camry and Honda Accord.

Electric car owners also benefit from fuel savings and lower maintenance costs. Electric vehicles do not require oil changes, and electricity is generally cheaper per mile than gasoline.

Tesla is the dominant manufacturer of electric cars in the United States, with a market share of 62 percent in the first quarter, according to Kelley Blue Book. But the share has fallen from more than 70 percent at the start of 2022 as established automakers such as General Motors, Ford Motor and Volkswagen have begun offering more electric models.

In China, a larger car market than the US or Europe, Tesla faces intense competition from local manufacturers that have newer model ranges, such as BYD. On average, electric vehicles from Chinese manufacturers have been in showrooms for a little more than a year, according to AlixPartners, a consulting firm. Tesla’s most popular car, the Model Y sports utility vehicle, was sold in 2020.

Chinese manufacturers also offer interior and exterior styling and entertainment and information systems that better satisfy local tastes, AlixPartners noted, citing consumer surveys.

While Tesla sales have continued to rise, the company’s profitability has suffered as it has had to cut prices to support demand. Tesla earned $2.5 billion in the first quarter, down from $3.7 billion in the final three months of 2022.

Many investors are betting that Tesla’s growth will accelerate as demand for electric vehicles grows and the company begins selling the Cybertruck, an electric pickup truck, later this year. Tesla’s agreement to allow other automakers, including Ford and GM, to use its charging network could also become a new source of revenue.

Tesla’s stock price has more than doubled this year, although it remains well below its peak in 2021, when the company was worth more than $1 trillion.

The automaker said on Sunday it would publish its financial results for the second quarter of the year on July 19.



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