Tesla inventory, order backlog data signal a worrying demand picture

Despite blowout delivery numbers for Q2, new data may be pointing to a demand problem for Tesla (TSLA).

The latest data from Matt Jung, who closely tracks Tesla data, shows US inventories for new Tesla models — including the S, 3, X, and Y — have been increasing in recent weeks, reaching 2,757 as of July 19.

A large buildup in inventory suggests Tesla could be upping its production volumes or is having a harder time selling new inventory.

Last month, Jung's data showed the company working through its inventory at a much quicker pace with inventories reaching 846 by late June after having stood north of 2,000 vehicles for most of the spring.

With July marking the start of a new quarter, Tesla doesn't necessarily offer incentives or similar sales tools to move inventory as the company would at the end of the quarter, but nonetheless the build in new vehicle stock is notable.

Looking across the product offerings, from early June until mid-July, the biggest builds in inventory appear to be of the more expensive Model X and Model S vehicles, but unsold stock of the cheaper Model 3 and Model Y is rising as well.

Another data source that tracks Tesla's order backlog is also showing a similar trend.

Tesla sales tracker Troy Teslike (as first noted by InsideEVs) finds that Tesla’s global order backlog fell to around 49,000 units as of June 30, which is around 17% less than what it was two weeks earlier and over 50% smaller than the 102,000 vehicle backlog seen on May 31.

Teslike's numbers are based on "Tesla-related stats (production volume, average wait times for each model/trim)" that the site has been collecting for several years.

The numbers suggest Tesla's US order backlog stood at 11 days at the end of June, a dramatic decrease from the 27 days noted in mid-May. The order backlog in days relates to the wait time a customer can expect when placing a new, custom order.

Rising inventories and a decreasing backlog of orders signal that the effect of Tesla's deep price cuts — combined with federal EV tax credits that fueled the company's second quarter deliveries beat — may be waning as the third quarter begins.

With Tesla expected to report earnings after the bell on Wednesday, there had been expectations on the part of Wall Street analysts that the company would hit its margin "trough" in Q2, and that the effects of lower component costs and improvements in manufacturing scale would offset the price cuts from earlier in the year.

With demand seeming to slip, however, Tesla may have to resort to more price cuts to gin up demand or decrease output.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance