Tesla’s U.S. sales tumbled 39%; revenue in China, other areas up
Tesla Inc’s third-quarter revenue tumbled 39 per cent in the United States, 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 showed on Tuesday.
U.S. sales, which account for the biggest share of the company’s total revenue, fell to US$3.13 billion from US$5.13 billion a year earlier.
Sales in China rose 64 per cent to US$669 million and its other segment, which covers the rest of the globe, rose by more than a billion dollars to US$1.83 billion, a regulatory filing showed.
“Musk & 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 U.S. growth will remain more challenging going forward.
In its earnings report earlier this month, Tesla reported a nearly eight-per-cent drop in total revenue to US$6.30 billion, missing analysts’ average estimate of US$6.33 billion, according to IBES data from Refinitiv. 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-per-cent rise in the second quarter ended June.
Tesla did not respond to a Reuters request for comment on the reason for the fall in the U.S. market.
Tesla is expanding its service in other markets including China and Europe, as 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 US$1.5 billion in 2019.
In the filing, Tesla also said it had a provision for warranty of US$138 million in the third quarter versus US$187 million 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.
The company’s shares were down 3.51 per cent at US$316.22 on the day in New York.