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Cars don’t generally start skidding till snow season. But August and September brought in a sharp slowdown in Tesla U.S. registrations, which are proxies for sold and delivered cars.

According to data from Dominion Cross-Sell, registrations were up 93.3% year over year in July 2019 in the 22 states the company tracks. However, registrations in August 2019 were down about 38% from the same period in 2018 and by 18.7% in September.

In total, the third quarter of 2019 still had more registrations between the Model 3, S, and X than in 2018, but that was because of the big jump in Model 3s in July: 5,008 in 2018 and 11,823 in 2019.

“It doesn’t surprise me,” says Philippe Houchois, managing director of automotive equity research at Jefferies. “There was a step down in the Federal [electric vehicle] credit.” According to Edmunds, the credit for Teslas dropped from $3,750 through June 30, 2019 to $1,875. “I’m guessing that in July they still had some leftover deliveries from the second quarter.” Even if the sale counted to gain the credit, accounting rules wouldn’t let Tesla recognize the income until the car shipped to the customer.

The swing was most pronounced in the Model 3, the least expensive Tesla line that was supposed to attract a broader class of buyer. In July, sales were up 136.1% year over year. But in August, sales were down 40.3% and then down 16% in September.

The Model S was generally down: -12.8% in July between 2018 and 2019, -31.6% in August and -37.9%, and in September. The Model X was up 17% in July, down -14.1% in August, and then at -16.7% in September.

The drop was most pronounced in California, which is Tesla’s biggest U.S. state for sales. The state saw 4,275 registrations across the three models in July 2018 of 4,275 and 9,273 in July 2019, a jump of 116.9%. Then they fell year-over-year in August by -60.1% to 3,737 and by -26.8% to 4,667 in September.

Prices also seemed to drop. Cross-Sell only provided data for Texas, but the average Model 3 price in September 2018 was $55,775.90. In September 2019, it was $50,674.81. The Model S went from $106,884,14 to $93,381.71. The Model X dropped from $108,401.88 to $103,585.21.

Trying to gain a preview of Tesla’s financial performance from this data is difficult. Registrations won’t include sales in other countries, leases revenue would be treated differently in accounting than an outright sale, and some portion of the sales will be of previously leased and now used vehicles, which would bring lower prices.

But there are suggestions the company could face challenges. “In the second half of last year, the target for Tesla was to be able to produce 10,000 Model 3s per week,” Houchois says. “We haven’t seen that at all. Weekly production has gone up, but it’s less than 7,000 a week.” The problem could be lower demand, a lack of capacity, production and delivery issues, or a combination of all three.

Tesla Numbers Show a Sudden Drop in August and September—Report

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