Carvana stock craters as outlook darkens for used vehicle market

Shares of Carvana posted their worst day on record Friday after the company missed Wall Street’s top- and bottom-line expectations for the third quarter as the outlook for used cars falls from record demand, pricing and profits during the coronavirus pandemic.

The stock cratered 39% to end the day at $8.76 a share — slightly higher than its worst-ever closing price of $8.72 a share from May 2017. Shares of the online used car retailer have plummeted by 96% this year, after hitting an all-time intraday high of $376.83 per share on Aug. 10, 2021

The stock’s all-time low of $8.14 a share occurred less than a week after it started trading publicly on April 28, 2017. Carvana’s previous worst day of trading was a 26.4% decline on March 18, 2020.

Morgan Stanley on Friday pulled its rating and price target on Carvana. Analyst Adam Jonas cited deterioration in the used car market and a volatile funding environment for the change.

“While the company is continuing to pursue cost cutting actions, we believe a deterioration in the used car market combined with a volatile interest rate/funding environment (bonds trading at 20% yield) add material risk to the outlook, contributing to a wide range of outcomes (positive and negative),” he wrote in a note to investors Friday.

Pricing and profits of used vehicles have been significantly elevated as consumers who couldn’t find or afford to purchase a new vehicle opted for a pre-owned car or truck. Inventories of new vehicles have been significantly depleted during the coronavirus pandemic largely due to supply chain problems, including an ongoing global shortage of semiconductor chips.

But rising interest rates, inflation and recessionary fears have led to less willingness by consumers to pay the record prices, leading to declines for Carvana and other used vehicle companies such as CarMax.

Large franchised new and used vehicle dealers such as Lithia Motors and AutoNation warned of softening in the used vehicle market when recently reporting their third-quarter results.

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Carvana CEO and cofounder Ernie Garcia on a call Thursday described the next year as “a difficult one” for the company, citing a normalization of the used vehicle industry from its inflated levels and increasing interest rates, among other factors.

“Cars are an expensive, discretionary, often-financed purchase that inflated much more than other goods in the economy over the last couple years and it is clearly having an impact on people’s purchasing decisions,” he said.

Garcia described the end of the third quarter as the “most unaffordable point ever” for customers who finance a vehicle purchase.

Nearly all aspects of the Carvana’s operations declined from a year earlier during the third quarter, including a 31% decrease in gross profit to $359 million. Its retail units sold declined 8% compared with the third quarter of 2021 to 102,570 vehicles, while gross profit per unit — a highly watched metric by investors — declined by more than $1,100 to $3,500.

Carvana posted a wider-than-expected loss of $2.67 per share. Revenue also came in below expectations at $3.39 billion, compared with estimates of $3.71 billion, according to Refinitiv.

— CNBC’s Michael Bloom contributed to this report.

The $7,500 electric vehicle tax credit’s full value may be hard to get

Tomekbudujedomek | Moment | Getty Images

The historic climate legislation President Joe Biden signed in August offered a federal tax break — worth up to $7,500 — to households that buy new electric vehicles.

But it may be tough for consumers to get the full value of the tax credit — at least initially.

That’s largely due to the structure of the clean vehicle credit and certain requirements for consumers and car manufacturers. Those roadblocks, however, are poised to ease in the longer term, experts said.

The tax credit ‘bummer’: It’s nonrefundable

The legislation, called the Inflation Reduction Act, made the tax credit “nonrefundable.”

That means consumers can only get the full financial benefit if they have a federal tax liability of at least $7,500. A nonrefundable credit offsets a consumer’s federal tax bill but any leftover value is lost.

Let’s say a consumer buys an electric vehicle today. When filing their 2022 tax return, the person finds they owe $5,000 in federal taxes. This person wouldn’t get the full $7,500 tax credit — they’d be able to claim $5,000 and cut their tax bill to zero. But the remaining $2,500 would be lost. In other words, those funds wouldn’t be issued to the consumer in a tax refund.

In addition, unlike some other tax credits in the bill — such as the “residential clean energy” credit for home solar panels and other installations — any unused value doesn’t carry over to future tax years to offset a future tax bill.

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“That’s kind of the bummer” of the credit, said Dan Herron, a certified public accountant and certified financial planner based in San Luis Obispo, California.

High-income consumers would generally be most likely to benefit from the full credit value relative to those with more modest earnings, since they typically have larger tax bills, Herron said. But the credit comes with some additional restrictions — such as an income cap, explained in more detail below — that will restrict how many of those households can benefit.

Meanwhile, middle- and lower-income buyers typically have smaller tax bills, meaning it’s more likely they wouldn’t collect the full credit, Herron said.

States, municipalities and utilities may also offer financial incentives for electric vehicle purchases.

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“If you can harvest some gains or have additional income you can pull into 2022, maybe you consider that,” Herron said.

Workers can also adjust the tax withholding on their paychecks, opting to withhold less and thereby increasing the taxes they owe.

However, Herron doesn’t recommend this route due to potential unknowns. For example, an unexpected bonus during the year might mean a larger-than-expected annual tax bill, depending on the withholding adjustment.   

Parameters that may reduce the credit

Sinology | Moment | Getty Images

There’s a lot of uncertainty.

Joel Levin

executive director of Plug In America

Two other rules apply to manufacturing: One carries requirements for sourcing of the car battery’s critical minerals; the second requires a share of battery components be manufactured and assembled in North America. Consumers lose half the tax credit’s value — up to $3,750 — if one of those requirements isn’t met; they’d lose the full $7,500 for failing to meet both.

It’s unclear which electric vehicles will meet these standards and qualify for a tax credit next year. There’s a chance none may immediately qualify, according to the Alliance for Automotive Innovation.

“There’s a lot of uncertainty,” said Joel Levin, executive director of Plug In America.

“If you need a car, I think it’s risky to delay buying in hopes of getting the credit,” he added. “It may not work out or it may be a couple years until it’s eligible.”

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One other consideration: Consumers who buy a Tesla or General Motors model before the tighter rules kick in Jan. 1 aren’t eligible for a tax break based on earlier parameters around sales caps that are set to lapse at the end of the year.

There’s also another option: buying a used EV instead of new one.

The Inflation Reduction Act created a “credit for previously owned clean vehicles” worth up to $4,000 starting in 2023. The tax break comes with some restrictions (like a $25,000 cap on the car’s sticker price and lower income caps for consumers) but doesn’t carry the manufacturing and assembly requirements of new cars.

A more consumer-friendly option

Consumers who are willing to wait until 2024 to buy a new or used car — and get the associated tax break — will have the most consumer-friendly option at their disposal, experts said.

That’s because the climate law will then allow a buyer to transfer their tax credit to the car dealer. A dealer — which must register with the U.S. Department of the Treasury — would get an advance payment of the consumer’s tax credit from the federal government.

As a result, consumers can likely receive the full tax credit at the point of sale from the car dealer as a discount on the sticker price or a reduction in the vehicle’s down payment, Levin said. And they’ll get that discount even if they don’t have a tax liability, he added.

“It makes the credit much more valuable to people, especially people who are of moderate income and don’t have a lot of money sitting in their pockets for the down payment,” Levin said.

Electric and autonomous vehicle ETF falls 15% in September

GMC vehicles sit on display at the Sterling McCall Buick GMC dealership on February 02, 2022 in Houston, Texas.

Brandon Bell | Getty Images

A key ETF for electric and autonomous vehicle stocks suffered an ugly month in September, falling nearly 15% amid fears a recession could slow revenue for the automakers.

The Global X Autonomous and Electric Vehicles ETF closed on Friday at about $20, more than 37% off the group’s 52-week high. It was the second worst-performing month for the group on a percentage basis on record, behind only March 2020 when the overall stock market saw dramatic declines.

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Investors are growing concerned that the potential for a recession won’t deter the Federal Reserve Bank from its plan to continue hiking interest rates, which in turn could make new vehicles more costly for consumers and businesses that need to finance the purchases.

Consumers are already grappling with sticker prices that are higher than ever – and with tight supplies that have led some dealers to demand additional premiums. According to J.D. Power estimates, the average transaction price for a new car sold in August was $46,259, the highest on record.

TrueCar analyst Zack Krelle thinks consumers are already beginning to balk at those high prices, especially as inflation drives their other expenses higher – and especially as interest rates continue to rise.

“We’re seeing consumers faced with the reality that to afford the same vehicle at the same monthly payment as last year, they are forced to increase their down payment, which is creating new affordability challenges,” Krelle said in a statement on Thursday. “With increasing interest rates, affordability is being tested.”

It’s likely that automakers’ profits will slump if the U.S. enters a recession. That has put pressure on the stocks of auto giants like Ford Motor (down 27% in September), General Motors (down 18%), and Volkswagen (down 13%), all of which are included in the ETF’s holdings.

It’s also pressuring shares of the suppliers and startups in the EV and autonomous-driving spaces that make up the majority of the ETF’s portfolio. Not only would a recession limit automakers’ ability to invest in new technologies, but higher interest rates — and the market weakness that could accompany a recession — would also make it harder for those smaller companies to raise additional capital from other investors.

Most major automakers are prepared to ride out a recession. But many of the smaller companies in the EV and self-driving spaces could struggle. Some of the names that have attracted investor attention over the last couple of years are still a long way from sustainable profitability and are likely to need additional cash infusions over the next few years.

Some, like EV battery startup QuantumScape (a constituent of the ETF, down 21% in September) may not even have meaningful revenue for several more quarters, much less profits.

Among the ETF’s other big movers in September:

  • Lidar maker Luminar Technologies was down 13% for the month.
  • Chinese electric-vehicle makers Nio and XPeng ended the month down 20% and 34%, respectively.
  • Electric heavy-truck maker Nikola fell 35% in September.

— CNBC’s Gina Francolla contributed to this report.

Electric vehicle (EV) sales set to hit an all-time high in 2022, IEA says

Tesla electric cars photographed in Germany on March 21, 2022. According to the International Energy Agency, electric vehicle sales are on course to hit an “all-time high” this year.

Sean Gallup | Getty Images News | Getty Images

Electric vehicle sales are on course to hit an all-time high this year, but more work is needed in other sectors to put the planet on course for net-zero emissions by 2050, according to the International Energy Agency.

In an announcement accompanying its Tracking Clean Energy Progress update, the IEA said there had been “encouraging signs of progress across a number of sectors” but cautioned that “stronger efforts” were required to put the world “on track to reach net zero emissions” by the middle of this century.

The TCEP, which is published yearly, looked at 55 parts of the energy system. Focusing on 2021, it analyzed these components’ progression when it came to hitting “key medium-term milestones by the end of this decade,” as laid out in the Paris-based organization’s net-zero pathway.

On the EV front, the IEA said global sales had doubled in 2021 to represent nearly 9% of the car market. Looking forward, 2022 was “expected to see another all-time high for electric vehicle sales, lifting them to 13% of total light duty vehicle sales globally.”

The IEA has previously stated that electric vehicle sales hit 6.6 million in 2021. In the first quarter of 2022, EV sales came to 2 million, a 75% increase compared to the first three months of 2021.

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The IEA said both EVs and lighting — where more than 50% of the worldwide market is now using LED tech — were “fully on track for their 2030 milestones” in its net-zero by 2050 scenario.

Despite the outlook for EVs, the IEA separately noted that they were “not yet a global phenomenon. Sales in developing and emerging countries have been slow due to higher purchase costs and a lack of charging infrastructure availability.”

Overall, the rest of the picture is a more challenging one. The IEA noted that 23 areas were “not on track” with a further 30 deemed as needing more effort.

“Areas not on track include improving the energy efficiency of building designs, developing clean and efficient district heating, phasing out coal-fired power generation, eliminating methane flaring, shifting aviation and shipping to cleaner fuels, and making cement, chemical and steel production cleaner,” the IEA said.

The shadow of 2015’s Paris Agreement looms large over the IEA’s report. Described by the United Nations as a “legally binding international treaty on climate change,” the accord aims to “limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels.”

Cutting human-made carbon dioxide emissions to net-zero by 2050 is seen as crucial when it comes to meeting the 1.5 degrees Celsius target.

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In a statement issued Thursday the IEA’s executive director, Fatih Birol, appeared cautiously optimistic. “There are more signs than ever that the new global energy economy is advancing strongly,” he said.

“This reaffirms my belief that today’s global energy crisis can be a turning point towards a cleaner, more affordable and more secure energy system,” he added.

“But this new IEA analysis shows the need for greater and sustained efforts across a range of technologies and sectors to ensure the world can meet its energy and climate goals.”

The IEA’s report comes at a time when the debate and discussion about climate goals and the future of energy has become increasingly fierce.

This week, the U.N. secretary general said developed economies should impose an extra tax on the profits of fossil fuel firms, with the funds diverted to countries affected by climate change and households struggling with the cost-of-living crisis.

In a wide-ranging address to the U.N. General Assembly in New York, Antonio Guterres described the fossil fuel industry as “feasting on hundreds of billions of dollars in subsidies and windfall profits while households’ budgets shrink and our planet burns.”

Ford’s new vehicle sales slow in August, in line with expectations

2023 Ford F-150 Raptor R

Ford

DETROIT – Ford Motor on Friday said its U.S. sales last month increased double-digits from a year earlier but were off about 4% from the prior month, as the company and auto industry continue to manage significant supply chain issues.

The Detroit automaker reported August sales of 158,088 new vehicles in the U.S., a 27% increase from August 2021, when the company’s production and sales were significantly impacted by a shortage of semiconductor chips. Last month’s sales were down 3.6% compared to July, including an 8% decline in its F-Series pickup trucks.

Those sales were in line with analyst expectations, though. The company said its Ford brand was America’s best-selling brand for a second consecutive month.

Sales of Ford’s profitable F-Series pickups were up 1.7% for the month from August 2021 but off 10.7% for the first eight months of the year compared with the same period last year. The company has sold 6,842 models of its all-electric F-150 Lightning pickup as of Aug. 31, including 2,373 vehicles last month.

“F-Series was America’s best-selling truck, best-selling hybrid truck and best-selling electric truck with F-150 Lightning in August. Ford’s overall electric vehicle portfolio expanded four–fold in July, while conquesting from competitors at a rate over 60%,” Andrew Frick, Ford vice president of sales, distribution and trucks, said in a release.

Ford’s 2022 electric vehicle sales totaled more than 36,500 units through August. That included sales of about 5,900 vehicles in August, which was 23% lower than the prior month but up more than 300% from a year ago.

Year-to-date sales of all Ford’s vehicles, including its luxury Lincoln brand, totaled more than 1.2 million units through August, a 0.2% decrease from a year ago. At the end of last month, the automaker’s U.S. vehicle inventory, including dealer stock and in-transit vehicle, was about 259,000 units, up from 245,000 in July.

J.D. Power and LMC Automotive estimate total U.S. new vehicle sales last month topped 980,000 units, which would be 2.6% lower than August 2021 – the first month the auto industry’s vehicle inventories were significantly impacted by an ongoing shortage of semiconductor chips.

RBC Capital Markets said the seasonally adjusted annualized rate, or SAAR, for new vehicles was 13.4 million, slightly higher than its 13.2 million forecast and in line with July’s 13.5 million. The SAAR is a closely watched metric by analysts and investors.

This is Dodge’s first electrified vehicle

2023 Dodge Hornet GT

Dodge

DETROIT – The first electrified vehicle for the Dodge brand under Stellantis will be a plug-in hybrid crossover called the Hornet, a resurrected name most recently used for a 1970s station wagon.

The compact crossover will be Dodge’s new entry-level vehicle, with a starting price of less than $30,000 for a Hornet GT model with a 2.0-liter turbo four-cylinder engine. The plug-in hybrid model, which Dodge is calling the Hornet R/T, will start at about $40,000.

While the Hornet isn’t one of Dodge’s signature muscle cars, it’s an important vehicle for the brand’s sales and electrification strategy. It marks a return to the lower-priced mainstream market following the discontinuation of the Dart sedan and Journey crossover in 2016 and 2020, respectively.

“We think the potential is huge with the growth of this segment,” Dodge CEO Tim Kuniskis said during a media briefing. He declined to discuss sales expectations for the vehicle, which was unveiled Tuesday night at an event in Pontiac, Michigan.

2023 Dodge Hornet GT 

Dodge

The compact crossover segment is one of the largest segments in the industry, but Kuniskis said Dodge will position the Hornet differently than competitors.

Dodge says the Hornet will have the top performance in the segment and offer unique aspects, including a “Power Shot” mode for the plug-in hybrid that instantaneously provides 25 more horsepower to the vehicle.

The Hornet R/T PHEV will have more than 285 horsepower and 383 foot-pounds of torque, according to Dodge. It will be able to travel more than 30 miles before a 1.3-liter turbocharged internal combustion engine turns on to power the vehicle. Dodge says the GT model will have at least 265 horsepower and 295 foot-pounds of torque.

The Hornet GT is expected to arrive in U.S. showrooms late this year, followed by the plug-in model next spring. The vehicles will be produced at a plant in Italy alongside the Alfa Romeo Tonale, which has a shared a platform and components but different design characteristics.

2023 Dodge Hornet GT GLH Concept

Dodge

Dodge also showed a concept vehicle called Hornet GT GLH (Goes Like Hell) – another resurrected name from the Dodge Omni GLH in the mid-1980s – that could be built using aftermarket parts or go into production at a later date, offering additional performance to the vehicle lineup.

The unveiling of the Hornet comes a day after the company confirmed it would discontinue the Dodge Charger and Challenger muscle cars at the end of next year. They are expected to be replaced by at least one new electric performance car starting in 2024.

Read more about electric vehicles from CNBC Pro

Stellantis was formed by the merger automaker of Fiat Chrysler and France-based Groupe PSA. It has 14 auto brands including Alfa Romeo, Chrysler, Dodge, Fiat, Jeep and Peugeot. The company is investing $35.5 billion in vehicle electrification and supporting technologies through 2025.

The Hornet name was first used for a car produced in the 1950s by Hudson Motor, made popular in recent years by Disney’s “Cars” franchise. It was then used by American Motors in the 1970s, followed by Chrysler, now known as Stellantis, for a concept car that never made it into production in 2006.

2023 Dodge Hornet GT GLH concept

Dodge

Ford CEO doesn’t expect electric vehicle battery costs to drop soon

Ford CEO Jim Farley poses with the Ford F-150 Lightning pickup truck in Dearborn, Michigan, May 19, 2021.

Rebecca Cook | Reuters

WAYNE, Mich. – Ford Motor CEO Jim Farley does not expect the costs of raw materials for the company’s electric vehicles to ease in the near future, marking the latest signal that automakers will continue hiking prices for their new EVs.

“I don’t think there’s going to be much relief on lithium, cobalt and nickel anytime soon,” Farley told reporters Wednesday during an event at the automaker’s Michigan Assembly Plant.

Farley’s comments come a day after the Detroit automaker announced it would be raising the starting prices for its electric F-150 pickup due to “significant material cost increases.” The increases range from $6,000 to $8,500, depending on the model. Ford isn’t alone: Rival Tesla increased its U.S. prices in June.

Prices of all lithium, cobalt and nickel have risen sharply over the past year as demand from battery makers has outpaced miners’ efforts to increase supply.

Farley said the fast-rising costs of the minerals used in its current lithium-ion batteries are why Ford plans to offer lower-cost lithium iron phosphate, or LFP, batteries in vehicles such as the F-150 Lightning and Mustang Mach-E crossover.

“I don’t think we should be confident in any other outcomes, than an increase in prices,” he said. That’s why we think LFP technology is critical … We want to make these affordable.”

Read more about electric vehicles from CNBC Pro

Last month, Ford said it will begin offering LFP batteries from Chinese battery giant CATL that don’t use nickel or cobalt as a lower-cost option in the Mustang Mach-E next year. The company plans to expand the option to the F-150 Lightning in 2024.

Ford also has invested in Colorado-based battery startup Solid Power, one of several companies working to develop solid-state batteries for electric vehicles. Solid-state batteries have the potential to offer EV owners more range, shorter recharging times, and a lower risk of fires than today’s batteries.

Solid Power said Tuesday that it’s on track to deliver prototype batteries to Ford and BMW, also an investor, by the end of the year. But vehicles using the batteries are still at least a few years away.

Ford CEO Farley outlined plans for automaker’s electric vehicle shift

Electric vehicle batteries are in short supply, and costs for materials such as nickel and cobalt are surging. Yet legacy automaker Ford Motor says it plans to be profitably building millions of EVs a year in just four years.

This week, the Detroit automaker gave investors a little more clarity about how it plans to reach that goal and transform its business built on gas-guzzling cars.

As electric vehicles account for a growing share of the global car market, Ford in March announced it would reorganize its business and separate its internal-combustion engine and electric vehicle efforts. By 2026, it said it expects to build more than 2 million electric vehicles annually — about a third of its total global production — while expanding its operating profit margin.

Wall Street analysts were generally positive about the plan, but some expressed skepticism about the lack of specifics around how the company plans to overcome the supply challenges in the market. Morgan Stanley’s Adam Jonas called it a “stretch” goal and said he lacked confidence in Ford’s ability to secure enough raw materials and tooling to manufacture batteries to even come close to its projection.

Ford addressed some of those concerns in another presentation on July 21, when it told investors that it has secured enough batteries to get to its near-term target: 600,000 EVs per year by the end of 2023. As of now, it said, it has secured about 70% of what it needs to hit its 2026 goal.

Ford promised to share more about how it plans to hit its goals during its annual capital markets day next year. But during its second-quarter earnings call last week, CEO Jim Farley gave some more hints about the automaker’s strategy.

A chance to simplify

Fitting dealers into the future

Ford is at a disadvantage to companies like Tesla and EV startups that sell directly to consumers, without dealers acting as middlemen.

The company isn’t planning to eliminate its franchised dealers, which enjoy strong legal protections in many U.S. states that effectively forbid Ford from selling directly to its customers as Tesla does. But Farley said that Ford sees a path to reducing that cost disadvantage — which he estimates at around $2,000 per vehicle — by keeping dealers’ inventories very low and by shifting the way Ford markets its products.

One key to that effort: Ford plans to let customers order its EVs online rather than buying a vehicle from a dealer’s inventory.

As Farley sees it, dealers will have only a few new vehicles on their lots, just enough to offer test drives to customers before they order. Customers will be able to order from the dealership or online “in their bunny slippers,” Farley said, with the dealer making the delivery and providing service after the sale.

Farley estimates that the low dealer inventories and online ordering will make up roughly $1,200 to $1,300 of that $2,000 per-vehicle cost disadvantage, while ensuring that Ford’s dealers remain profitable. The plan will free dealers from having to carry costly inventories, allowing them — in theory, at least — to focus more on service and customer education. That could give Ford an edge that EV makers selling direct won’t be able to easily match.

“I think that’s a different play than the pure EV companies,” Farley said.

Toyota joins Tesla and GM in losing federal electric vehicle tax credits

A Toyota bZ4X on display at the New York Auto Show, April 13, 2022.

Scott Mlyn | CNBC

Toyota Motor said it sold its 200,000th plug-in electric vehicle during the second quarter, triggering a phase out of U.S. tax credits of up to $7,500 for people who buy the cars.

The Japanese automaker joins Tesla and General Motors in initiating a phase-out of the credit for future consumers who purchase an all-electric or plug-in hybrid electric vehicle. The milestone comes at an inopportune time, with Toyota ramping up production of its new all-electric bZ4X.

In June, the CEOs of General Motors, Ford Motor, Chrysler parent Stellantis and Toyota Motor North America urged Congress to lift the cap on the number of EVs a manufacturer sells before the credits start phasing out. But Toyota and other automakers with non-union workforces in the U.S. opposed a tax credit program last year by the Biden administration that included additional credits for EVs built by organized labor.

Opponents of the tax program say that the credits have largely benefited the wealthy and that the government shouldn’t subsidize the purchases. Supporters of the credits say they have spurred adoption of electric vehicles and assisted in lowering the cost of the pricy vehicles for consumers.

The winding down of the federal tax credits starts two quarters after an automaker sells 200,000 plug-in vehicles. The value of the tax credit is halved every six months until hitting zero.

Toyota’s winddown of the credit will begin Oct. 1 and be complete by October 2023, the company confirmed Wednesday to CNBC.

The winding down of the credits is pending any changes to the EV tax credit program, which started in 2008 and was expanded in 2009.

Nissan and Ford Motor are the next nearest manufacturers close to tapping out on credits, according to Bloomberg News, which first reported Toyota’s phase out initiating. Nissan has sold 166,000 electric vehicles as of the end of 2021, followed by Ford’s 157,000, according to Bloomberg.

Tesla (TSLA) Q2 2022 vehicle delivery and production numbers

A giant cowboy boot is on display outside the Tesla Giga Texas manufacturing facility during the “Cyber Rodeo” grand opening party on April 7, 2022 in Austin, Texas.

Suzanne Cordeiro | AFP | Getty Images

Tesla just posted its second-quarter vehicle production and delivery numbers for 2022. Here are the key numbers:

  • Total deliveries Q2 2022: 254,695
  • Total production Q2 2022: 258,580

Delivery numbers, which are the closest approximation of sales reported by Tesla, fell just shy of analysts’ expectations.

According to a consensus compiled by FactSet-owned Street Account, analysts were expecting deliveries of 256,520 vehicles for the quarter, which was marked by Covid restrictions, supply chain snarls, semiconductor chip and other parts shortages.

Last year, Tesla delivered 201,250 vehicles in the second quarter, its first time delivering more than 200,000 units in a three-month period. In the first quarter of 2022, Tesla delivered 310,048 vehicles.

Today’s delivery numbers represented sales growth of 26.5% year-over-year, and a 17.9% decrease sequentially for Elon Musk’s electric vehicle venture.

The company has soft-guided to around 50% average annual growth, long-term, depending on manufacturing capacity and other factors.

In Tesla’s first-quarter shareholder deck, the company said, “We plan to grow our manufacturing capacity as quickly as possible. Over a multi-year horizon, we expect to achieve 50% average annual growth in vehicle deliveries.”

In China this quarter, Tesla had to shut down or only allow partial operations at its Shanghai factory for weeks due to covid-related public health orders. (FactSet noted that some analysts’ projections were excluded from the StreetAccount consensus if they did not take into account the Shanghai factory shutdown.)

Other supply chain snarls, worsened by Russia’s brutal invasion of Ukraine, also impacted Tesla and the broader auto industry during the quarter.

Separately, Tesla is grappling with the high costs of building out and starting up production at new factories in Austin, Texas and near Berlin in addition to its Fremont, California and Shanghai plants. CEO Elon Musk has publicly lamented that the new factories are costing Tesla billions, but have not yet been able to make enough vehicles and batteries to justify their costs.

As startups and legacy automakers offer more new electric vehicles, Tesla’s share of the global and domestic EV market is expected to decrease but remain substantial.