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Jul 07, 2023

Here's Why Tesla Is Currently Having The Time Of Its Life

It's a good time to be Elon Musk, because Tesla is living its best life at the moment. We've written numerous times about how Tesla is a company known to overpromise and underdeliver. I mean, the

It's a good time to be Elon Musk, because Tesla is living its best life at the moment.

We've written numerous times about how Tesla is a company known to overpromise and underdeliver. I mean, the Cybertruck is one prime example, and the highly-anticipated second-generation Roadster is still missing in action with no updates on its development status whatsoever. With no new model for more than three years, you'd think that the company has gone stale and boring, which means people are probably uninterested to buy a Tesla at this point, right? Well, that's where you're wrong. While the company hasn't released a new car for over three years (facelifts of the Model S and X aren't full model changes), Tesla is currently having the time of its life, and that's thanks to a couple of bold moves that have paid off so well.

Related: Here's Why Elon Musk Is Slashing The Price Of The Tesla Model 3

Tesla recently initiated a so-called "price war" by dropping the prices of the Model 3 and Model Y, even if that wasn't Elon Musk's intention. Nevertheless, its intended effect paid off... literally. Lower prices would mean lower profit margins, but that isn't exactly a bad thing if you sold so many vehicles as a result.

The EV automaker recently announced its quarterly earnings, and for the second quarter of 2023, Tesla produced 479,700 vehicles and delivered 466,140 of them. That's impressive for two reasons. The first one is that this is a more than 100 percent increase compared to the same period last year when it produces 258,850 vehicles and delivered 254,695 of them. This is also a figure that's bigger than the previous quarter's 440,808 units that were produced and 422,875 that were delivered.

Now, the second reason why this feat is also impressive is that Tesla managed to also reduce its inventories and thus was able to stabilize supply and demand much better. Their surplus units in the second quarter stood at 13,560, which is lower than the previous quarter's 17,933 units. You're also probably interested in the breakdown of Tesla's impressive sales, and spoiler alert, more than 90 percent of its sales were due to the Model 3 and Model Y--the models that received the bulk of the price cuts.

Production

Deliveries

Model S/X

19,489

19,225

Model 3/Y

460,211

446,915

Total

479,700

466,140

Related: Why Ford’s Access To Tesla’s Charging Network Will Change The World

Okay, so you probably don't like numbers as much as I do, but here's what these numbers mean. Tesla is currently laughing its way to the bank because these numbers are its best yet. Price cuts of as much as $20,000 were implemented at the start of 2023, but prices have swung up and down since then--though still mostly on a downtrend. As these numbers suggest, the tactic has paid off. While the profit per unit might be lower, the sheer fact that it more than doubled its sales over the same period last year practically negated that. At the same time, it means more people entering the Tesla ecosystem and data centers, leading to further development of its cars' software and most importantly, its Full Self Driving (FSD) feature.

The vast majority of the buyers of these new Teslas are also new to the brand. If their ownership experience also happens to be smooth sailing, then that's a whole new set of customers who has a higher chance of buying another new Tesla within their lifetime. "Tesla has made a strategic choice to be a volume manufacturer," Bill Russo, the founder and chief executive of advisory firm Automobility, told the BBC. "This was the main contributor to the sales increase, as its mainly higher-volume Model 3 and Model Y benefited from the price war," he added.

Whereas most people think that Tesla has hit a ceiling, it seems Elon Musk has defied that. Compared to internal combustion engine (ICE) cars, Teslas still cost much higher, which means that while the launch of more affordable models like the Model 3 and Model Y has helped the brand gain more sales over the years, there's still more room for market penetration for Tesla. Yes, Tesla hasn't released a new model for years now, but by pricing the Model 3 and Model Y much lower than ever, Tesla now becomes more accessible to those who always wanted to own one but found the cars out of reach in terms of price. Until now, that is.

Related: 10 Things Ford And Chevy Could Learn From Tesla

And it's not just in sales where Tesla is winning. In 2022, Tesla announced that its charging port standard, now called the North American Charging Standard (NACS) will be open for every other automaker or charging company to utilize. Just recently, one of Tesla's long-term wins is the fact that the automotive industry at large is currently building a future where NACS is what will eventually become the common charging port standard for North America, though it is unsure yet if the rest of the world will follow.

Currently, the most widely-used charging port standard on a global scale is the Combined Charging System (CCS), but ever since SAE International, the automobile standard organization said that it is supporting NACS as the official charging port standard for North America, automakers like Ford, GM, Rivian, and a number of EV charging companies have since announced their commitment to NACS. Volvo is also the first European automaker to commit to NACS, with all EVs to be made beginning in 2025 will come with NACS out of the factory while adapters from CCS to NACS will already be available by 2024. Even charging station operators themselves like ChargePoint and EVgo have announced their commitment to NACS as well.

This is a win for both Tesla and the automotive industry as a whole, though this probably benefits Tesla more. Tesla says that its NACS standard outnumbers CCS-equipped cars with a ratio of two-to-one in North America. In addition, the charging port standard allows for up to a whopping 1 MW of DC charging--way faster than the 350 kW DC that the cars like the Hyundai Ioniq 5 and Kia EV6 are touting. Another reason why this is a win for the industry as a whole is because Tesla's Supercharger network is the most diverse. By adopting NACS, other brands can now use the Supercharger network without the use of adapters, while charging stations converting to NACS will simply grow the pre-existing Superchargers utilizing the NACS standard.

Related: The Tesla Model Y Becomes The Second Best-Selling Vehicle Overall In The U.S.

What's amazing in all of Tesla's current victories is that they didn't even have to do something radically different apart from drastically lowering its prices and opening up the NACS charging standard to the entire automotive industry. Just imagine Apple being able to persuade the smartphone industry to adopt its Lightning connector as the common standard and that's pretty much similar to what Tesla has done.

But that doesn't mean there's nothing new in the pipeline for Tesla. Remember, the Cybertruck may be delayed, but its development is still ongoing and always one step closer to mass production--albeit not as fast as we hoped for. Just recently, we were able to see what the Cybertruck's interior will probably look like. In addition, Tesla did announce that production of the Cybertruck will begin this year in limited quantities. Therefore, expect Tesla's financial and sales performance to continue growing in the coming years.

Isaac Atienza is a Filipino motoring journalist who joined TopSpeed.com in 2021. He also owns a Filpino motoring website called Go Flat Out PH and is also a contributor to a local newspaper called The Manila Times. Isaac Atienza is a car enthusiast who especially thinks that wagons are the best type of vehicle, though sports cars and anything with three pedals also tickles his fancy.