On July 3, Beijing time, Tesla announced its delivery volume for Q2 2024 before the US stock market opened yesterday. Data showed that Tesla produced 411,000 vehicles and delivered 444,000 vehicles in Q2.

This exceeded analysts' expectations of 436,000 units, and Tesla's stock price has also surged continuously. As of today's pre-market, Tesla's stock price has increased by about 20% in three days, with a market capitalization increase of over $130 billion.

Combining the production and sales data from Q1, Tesla delivered a total of 831,000 vehicles in the first half of 2024. Although this is a decrease of 6.5% compared to the 889,000 vehicles delivered in the first half of 2023, it still exceeded BYD's pure electric vehicle sales of 726,000 units, winning the global EV sales championship in the first half of 2024. The gap between the two is 105,000 units.

In Q4 2023, BYD sold 526,000 pure electric vehicles in a single quarter, surpassing Tesla's 485,000 units.

However, this is not something for Tesla to celebrate.

01

Tesla's declining sales despite price cuts and promotions

When Tesla announced its production and sales data for Q1 2024, it produced 433,000 vehicles and delivered 387,000 vehicles, with a year-on-year decrease of 8.53% and a sequential decrease of 20.16%. Such a start to 2024 was disastrous for Tesla.

Tesla's stock price once fell to $136 per share, making it the worst-performing US company with a market capitalization of over $1 trillion in 2024.

Subsequently, Tesla stopped talking about delivery growth and removed the 2030 delivery target of 20 million vehicles from its "2023 Impact Report" released in May.

This is because on April 6, Musk announced that he would launch Robotaxi on August 8, and subsequently it was revealed that Tesla had halted its budget car plan.

To boost sales, Tesla began price cuts and promotions in various markets. In the US and European markets, Tesla could reduce prices, and in the US, Tesla even offered a car loan interest rate as low as 0.99%, far below the market rate of 7%. In the Chinese market, Tesla's price cuts have reached their limit, and it can only increase sales through promotional methods such as zero interest rates.

According to data released by Tesla, deliveries in Q4 2024 declined by 4.8% year-on-year, marking the first time in two consecutive quarters of year-on-year decline. Deliveries in the first half of the year were 831,000 units, a decline of 6.5% compared to the 889,000 units delivered in the first half of 2023.

According to data from market research firm MarkLines, Tesla has experienced double-digit declines in its core markets in the US, China, and Europe, with the European market experiencing the largest decline of 37%, the US market declining by 14%, and the Chinese market declining the least at 12%.

The Cybertruck, which Tesla had high hopes for, has sold less than 10,000 units this year due to production ramp-up issues. Meanwhile, Tesla's higher-priced Model S, Model X, and Cybertruck have delivered a cumulative total of only 21,000 units globally this year, indicating that Tesla's average price has further decreased due to price cuts, which may continue to drag down Tesla's gross margin.

Fortunately for Tesla, its energy storage business has taken off this year.

This is also a business that Musk has high hopes for. In Q1 2024, Tesla delivered 4.05 Gwh of energy storage, and in Q2, it increased by 130% to reach 9.4 Gwh. The gross margin of Tesla's energy storage business is 25%, higher than the 17% gross margin of its automotive business in Q1.

This may also be the reason why Tesla's stock price has surged by about 20% in these three days.

Although Tesla's sales have declined, under the definition of pure electric vehicles, Tesla still defeated BYD in the first half of 2024, becoming the automaker with the highest sales of pure electric vehicles globally.

02

Decline in pure electric vehicles and rise of plug-in hybrid vehicles

According to a market tracking report released by research firm Counterpoint, global sales of passenger electric vehicles (BEV+PHEV) increased by 18% year-on-year in Q1 2024, with pure electric vehicles (BEV) increasing by 7% and plug-in hybrid electric vehicles (PHEV) increasing by 46%.

As the global new energy sales champion, BYD's model sales trend also aligns with the general trend of pure electric vehicles growing slower than hybrid vehicles in 2024.

In the first half of 2024, BYD was the global new energy sales champion, delivering 1.613 million passenger vehicles, of which 726,000 pure electric vehicles accounted for 45%.

In 2023, BYD delivered 1.575 million pure electric vehicles, accounting for over 52.3% of its total annual deliveries of 3.01 million vehicles.

Yes, entering 2024, the proportion of pure electric vehicle sales has declined in BYD, while the proportion of hybrid vehicle sales has increased.

In Q1 2024, the major new energy vehicle markets were China, the US, and Europe.

Chinese new energy vehicles grew by 28% year-on-year, while the US grew by 2%, but US BEV sales declined by 3% year-on-year due to a 9% year-on-year decline in Tesla sales.

The reasons for the strong demand for hybrid vehicles, according to research analyst Abhik Mukherjee, may be the following two points: 1) Hybrid vehicles have lower acquisition costs; 2) Hybrid vehicles can be refueled, eliminating range anxiety. Especially for SUVs, which consume more energy, hybrid SUVs are more attractive to consumers and therefore especially popular.

It is worth mentioning that in the PHEV market, BYD accounts for nearly one-third of the global market share, followed by Geely, Lixiang, and Wenjie.

Tesla only produces pure electric vehicles, and the diversified market demand is unfavorable for Tesla, especially the rise of hybrid demand.

Not all countries have charging conditions as convenient and electricity prices as cheap as China. Overseas, the charging costs in developed countries are closer to gasoline prices. Therefore, plug-in hybrid vehicles or even extended-range vehicles will better meet market demand, especially in developing countries, especially oil-producing countries.

BYD delivered 300,000 pure electric vehicles in Q1 and 420,000 in Q2, again approaching Tesla. BYD's delivery volume this year is expected to be around 4 million units, with pure electric vehicles accounting for about 45%, or 1.8 million units. It remains to be seen whether Tesla can maintain or exceed last year's 1.81 million units.