Tesla Exceeds Q1 Sales Expectations Despite Factory Shutdown Due to COVID-19

[Asia Economy Reporter Eunmo Koo] Tesla recorded sales exceeding market expectations in the first quarter of this year despite factory shutdowns caused by the spread of COVID-19. With the U.S. announcing fuel efficiency regulation relaxations and the likelihood of environmental regulation easing increasing in Europe and China, the technological gap between Tesla, which can establish an independent ecosystem, and existing automakers requiring government support is expected to widen.

According to Samsung Securities on the 5th, Tesla sold 88,400 units in the first quarter of this year, a 73.6% increase compared to the same period last year, surpassing the market expectation of 79,900 units. Samsung Securities analyst Eunyoung Lim estimated in a report that “although the U.S. factory stopped operations from the 23rd of last month, the full shutdown was implemented at the end of March, and sales volume remained steady, so the first quarter performance is expected to maintain an operating profit margin of around 3-4%.”

U.S. sales in March also showed a 3.9% increase year-on-year to 12,348 units, indicating a shift to growth despite the expiration of subsidies. Analyst Lim stated, “Tesla has proven to be the only company capable of growth without subsidies,” and predicted, “With a 65% market share in the U.S. electric vehicle market in March, Tesla is virtually a monopoly, and the size of the electric vehicle market will be determined by Tesla’s sales volume as environmental regulations are relaxed.”

Following the recent relaxation of U.S. fuel efficiency standards from 19.8 km per liter to 17.2 km per liter until 2026, China and Europe are also likely to ease environmental regulations to delay restructuring of global automakers. As a result, the technological gap between Tesla and existing automakers that require government support is expected to widen.

Analyst Lim explained the sensitivity to regulation easing by saying, “The economic feasibility of electric vehicles has not yet reached that of internal combustion engine vehicles, and infrastructure expansion such as charging stations is still in the early stages, so easing regulations in the early formation stage of the electric vehicle ecosystem could delay the popularization of electric vehicles.” Therefore, the technological gap between Tesla, which can establish an independent ecosystem, and existing automakers is expected to widen. Lim added, “The longer the popularization of electric vehicles is delayed, the wider the gap in battery BMS technology and software technology between Tesla and existing automakers is expected to become.”