Tesla's sales growth suggests a renewed demand for electric vehicles

Tesla said on Wednesday that global sales of its cars and trucks rose 6.4 percent in the third quarter, the first quarterly growth the company has reported this year and a sign that demand for electric vehicles may be recovering as interest rates fall.

The automaker delivered 463,000 vehicles from July to September, up from 435,000 a year earlier, giving investors hope that the company's sales have stabilized after falling in the first half of the year.

The sales data came in just below Wall Street analysts' expectations, and Tesla's share price fell nearly 5 percent Wednesday morning.

Tesla boosted sales slightly by offering 2.5 percent financing to qualified buyers in the U.S., below market interest rates. It will be easier for the company led by Elon Musk to offer cheaper financing after the Federal Reserve cut interest rates by half a percentage point in September, in what is expected to be the first in a series of cuts. Central banks in Europe, China and elsewhere have also cut rates.

The interest rate determines the size of the monthly car payment and is often more important to buyers than the sticker price. That's why many analysts think that further Fed rate cuts could boost car sales, especially in the US.

“There's a group of people who are going to say, 'Now is not the time to commit $50,000 to a new car,'” said Charles Chesbrough, a senior economist at Cox Automotive, a research firm. “They may decide to wait a few months after the election, until the Middle East calms down, until they see if the Fed cuts rates further.”

Tesla's share of electric car sales has declined as rivals such as General Motors, Hyundai, Ford Motor and BMW offer more battery-powered models. But Tesla still sells about half the electric cars in the U.S. and sets the tone for the market here and in other countries.

Sales of electric cars, though still growing, have fallen short of expectations and prompted GM, Ford, Volvo and others to scale back or reduce investment in electric car production. A rebound in Tesla sales could signal faster growth in electric models, a pillar of the Biden administration's efforts to combat climate change.

On Tuesday, GM said sales of its electric models in the U.S. rose 60 percent from a year earlier to more than 32,000 units in the third quarter. The company's U.S. sales of all vehicles fell about 2 percent in the quarter.

Ford on Wednesday reported a 12 percent increase in U.S. electric vehicle sales in the third quarter, to about 23,500, and a 0.7 percent gain in overall car and truck sales.

Tesla still faces significant challenges and questions about its strategy. The company's sales have recovered in China, the world's largest car market. But the Chinese auto market is very competitive, and many automakers are losing money there or making small profits.

In Europe, sales of electric cars are falling after Germany cut subsidies for buyers. Tesla relies on just two vehicles — the Model Y sport utility vehicle and the Model 3 sedan — for most of its sales, while rivals like GM and Hyundai-Kia offer more choice, new designs and often lower prices.

A new electric version of GM's best-selling battery-powered model is the Chevrolet Equinox SUVGM sold more than 9,700 in the third quarter, and this week went on sale for an entry-level model of that vehicle that starts at $35,000 before federal and state breaks. The cheapest Tesla Model Y sells for about $45,000 before tax incentives.

In addition to selling more expensive cars, Tesla appears to be struggling as Mr. Musk has been criticized for his provocative statements on the social media site X, which he owns, and former President Donald J. Trump and his vocal support have alienated many potential buyers. Conservative reasons. Centrist and left-leaning consumers are more likely to buy electric cars than conservatives.

Mr. Musk has bet Tesla's future on autonomous driving, saying little about plans for the new model. On Oct. 10, the company plans to unveil a self-driving taxi, but analysts are skeptical that Tesla is as close as Mr. Musk thinks it is to developing a vehicle that can navigate itself without human intervention.

Assuming that Tesla will also unveil a cheaper passenger car on the same day, Tesla will increase the number of people who can afford it. The company said it is working on such a product, but did not confirm if it will showcase the car this month or when it might go on sale.