NEW YORK (AP) — Tesla reported a surprise increase in sales in the third quarter as the electric car maker likely benefited from a rush by consumers to take advantage of a $7,500 credit before it expired on Sept. 30.
The company reported Thursday that sales in the three months through September rose 7% compared to the same period a year ago. The gain follows two quarters of steep declines as people turned off by CEO Elon Musk's foray into right-wing politics avoided buying his company's cars and even protested at some dealerships.
The stock initially rose sharply on the news, but then fell back into losses as financial analysts expressed skepticism whether the new number signals a true turnaround given all the anti-Musk backlash.
“I don’t think most people are any more enamored with Elon now that they were a few months ago," said Telemetry Insight's Sam Abuelsamid. "I expect this is more a blip for Tesla than the restart of growth.”
Even one of the biggest bulls on Wall Street, Dan Ives of Wedbush Securities, was cautious in his assessment, saying there were lingering "demand issues.”
Still, it was a blowout number with sales hitting 497,099 vehicles versus 462,890 in the same period last year. Analysts expected sales to fall slightly to 456,000, even with a boost from customers seeking to use the electric vehicle incentive.
Tesla stock dropped more than 1.4% to $453 at 11 a.m. in New York.
Investors have been optimistic about the company in recent weeks, sending the stock up 34% in September alone. They are betting Musk’s planned new cheaper version of his bestselling Model Y will recharge sales. He had promised that car earlier this year. Now the launch is expected in the current quarter or early next year.
The rise in the stock also reflects Musk success in shifting attention away from car sales to other aspects of the business — the rollout of its driverless robotaxi service planned for several cities and its Optimus robots for factory work and household chores.
Investors are also bidding up the stock on Musk’s apparent renewed focus on the company since the Tesla board proposed a new pay package last month that would allow the Tesla CEO to earn $1 trillion over the next several years if he meets certain sales and other financial goals. The pay package, unprecedented for U.S. companies already known for outsized CEO pay, recently drew criticism from Pope Leo in an interview lamenting widening income gaps.
If Musk meets his pay package goals, he could be setting a record on top of his own record. He recently became the first person ever to hit $500 billion in net worth, at least according to the rich list compiler Forbes magazine.
The 7% sales rise in the last quarter compares with a 13% plunge in the first three months of the year when Musk led President Donald Trump’s government cost-cutting efforts at the Department of Government Efficiency. In the following three months through June, sales fell again 13%.
The backlash in Europe against Musk had been also been fierce with sales plunging 40% in more than two dozen countries after he publicly supported far-right politicians there.
Musk called British prime minister an “evil tyrant” who belongs in prison and told Germans “things will get very, very much worse” in their country if they didn’t vote for the anti-immigrant Alternative for Germany party. Protests broke out in several cities, including a hanging of the billionaire in effigy in Milan and posters in London likening him to a Nazi.
For her part, the Tesla head of the board of directors who approved Musk’s latest pay package recently told Bloomberg that she is not sure if Musk’s politics have had any impact on the company’s finances. Robyn Denholm has earned nearly $700 million in compensation for serving on the board since 2014, a package that itself has drawn criticism.
Tesla reports third-quarter earnings later this month. Profits for the previous quarter fell 16% as the company continued to lose market share to European EV makers and the fast-growing Chinese rivals, such as BYD.
The robotaxi launch with a test run in Austin in June has had some hitches with reports of the cabs stopping suddenly for no reason or driving in the opposing lane in one instance. But Musk has says the driverless rides will be available in several other cities by the end of next year.