Tesla's Sales Slowdown: A Closer Look Amidst Production Milestone

Mike Seuss
Jun 7
2 min read

Tesla faces significant headwinds as Goldman Sachs revises its price target downward, citing weaker sales performance across key global markets. Despite a massive achievement of 8 million cars produced, the electric vehicle giant grapples with declining deliveries in the United States, Europe, and China, prompting a reevaluation of its short-term outlook.

Tesla's Sales Slowdown Prompts Analyst Downgrade

Goldman Sachs has adjusted Tesla's price target from $295 to $285, maintaining a Neutral rating, due to a notable slowdown in sales. Tesla's stock has seen a nearly 18% decline in the past week, trading at $284.70, as analysts point to a consistent drop in deliveries across its major markets.

Regional Sales Performance

Tesla's sales challenges are evident across various regions:

United States: Quarter-to-date deliveries through May experienced a mid-teens year-over-year decline.
Europe: April registrations plummeted 50% year-over-year, with May showing a mid-20% decrease.
China: The China Passenger Car Association (CPCA) reported a 20% year-over-year drop in May, despite a 5.5% sequential increase from April.
Germany: May sales fell 36.2% year-over-year, contrasting with a 44.9% surge in overall EV registrations.
Spain: Sales dropped 29% last month.

Key Takeaways

Goldman Sachs lowered Tesla's Q2 delivery forecast to a base case of 365,000 vehicles, down from 410,000.
Consumer surveys from HundredX and Morning Consult influenced the revised delivery and EPS forecasts.
Despite sales challenges, Tesla maintains strong financials with $95.7 billion in trailing twelve-month revenue and a $917 billion market capitalization.

Strategic Moves And Supply Chain Resilience

Amidst these challenges, Tesla is implementing strategic initiatives. The Model 3 and Model Y are part of a Chinese government campaign aimed at boosting rural sales, which could help mitigate some losses. Analysts from Piper Sandler have reiterated an Overweight rating, highlighting Tesla's robust supply chain strategy. Alexander Potter noted Tesla's unique position in sourcing batteries at scale without relying on China, thanks to its vertical integration. This focus on innovation and supply chain resilience is expected to help Tesla maintain its competitive edge in the electric vehicle market, despite current short-term hurdles.