Tesla recorded a decline in vehicle sales in the second quarter, but exceeded expectations, leading to a rise in stock prices and strengthening Tesla's position as the world's leading seller of electric vehicles ahead of competitor BYD.

The company reported worldwide deliveries of 443,956 vehicles for the quarter, a decrease of 4.8% compared to the previous year. Despite the weakening demand and increasing competition, Tesla was able to maintain its market leadership. Analysts viewed the reduction in production numbers positively, as the slower sales had led to a buildup of unsold vehicles. Tesla produced 410,831 vehicles in the quarter, a reduction of 14% compared to the previous year.

The stock price of Tesla rose by 9% after the announcement of the results and closed at $778.57. Prior to the release, Tesla shares had fallen by 16% during the current year.

Elon Musk, CEO of Tesla, faces the challenge of developing new and more affordable models while simultaneously investing in costly projects such as robotics and self-driving technology. Tesla plans to spend $10 billion on artificial intelligence research this year and to unveil an autonomous robotaxi as well as the Optimus robot.

In the first quarter of 2024, Tesla reported an operating profit of 5.5%, compared to 16.8% in 2022. In response to the declining margins, Musk has announced plans to cut costs and lay off more than 10% of the global workforce.

Tesla plans to produce an updated Model 3 and the new Cybertruck, priced between $61,000 and $100,000. Meanwhile, competitor BYD sold 426,039 electric vehicles in the second quarter, representing a 21% increase compared to the previous year.

In China, one of Tesla's most important markets, sales in June decreased by 24% compared to the previous year. The broader market benefited from discounts and government subsidies, while Tesla struggled with pricing strategy.

Despite the challenges, Tesla remains the leader in the US electric vehicle market. In May, the company accounted for nearly half of all electric vehicles sold in the US, compared to around 60% during the same period last year.

Other automobile manufacturers such as General Motors and Toyota also reported their sales figures for the second quarter. General Motors recorded nearly unchanged sales, while Toyota reported a 9% increase compared to the previous year.

A cyberattack on software provider CDK Global last month disrupted sales at many car dealerships, forcing them to resort to traditional methods like pen and paper. CDK announced that all dealer clients should be reconnected by Thursday.

Even before the attack, U.S. auto sales in the first half of the year were largely unchanged compared to the previous year, as the industry continued to struggle with high interest rates that increase monthly payments. Electric vehicles are particularly affected, as they tend to be more expensive than their gasoline-powered counterparts.

Despite the challenges, Musk remains optimistic and believes that millions more people would buy a Tesla vehicle if they could afford it. The company is working on more affordable models that are expected to be unveiled either later this year or early next year.

“For most people, it really isn't a question of whether they want a Tesla. They want a Tesla. They just don't have enough money to afford one," said Musk at a shareholder meeting in June.