Tesla is running out of Teslas

In recent quarters, Tesla demand has been falling off a cliff. But this quarter is shaping up to look a lot better, thanks in part to the elimination of the government’s $7,500 electric vehicle tax credit, which ends September 30.

While getting rid of a big tax break for all EVs may ultimately be bad for sales, it’s a near-term boon this quarter, as people who would have purchased an EV later on are purchasing them now to capitalize on it. Tesla is no exception, even though as a luxury car brand its buyers are generally less price sensitive so the discount means less.

In combination with the steep discounts Tesla is offering — it makes sense for the company to get ahead of the federal tax credit sunset, too — the automaker is, for the first time in a while, seeing demand for its vehicles outpace supply.

In fact, a number of areas in the country are facing inventory shortages. There’s currently no new inventory of the company’s most popular Model Y within a 200-mile radius of Austin, Texas, where it’s made, or Seattle. There are about six near Manhattan and eight in San Francisco. (Cybertrucks, of course, are a different story.)

A banner on Tesla’s website currently reads: “$7,500 Federal Tax Credit Ending. Limited Inventory — Take Delivery Now.”

And the wait times for new orders are currently around five to six weeks, up from one to two weeks earlier in the quarter.

A popular Tesla analyst who goes by Troy Teslike has increased his estimates for Tesla Q3 sales to 455,000 — just about 2% shy of the 463,000 it sold the same quarter a year earlier, and much better than the 13% dip the company experienced the quarter before. He as well as the FactSet analyst consensus estimates are still predicting a substantial full-year decline of about 10%.

Of course, in recent quarters Tesla has not only been selling fewer vehicles than it had, but it’s been making fewer, too. In other words, it’s been effectively trying to lower supply to address the drop-off in demand.

Tesla is also doing its best to move existing inventory to try to get ahead of waning demand for its existing offerings as it brings new vehicles to market.

On Tesla’s latest earnings call, CEO Elon Musk revealed that the company’s long-awaited more affordable model is in fact just a stripped down Model Y, as previously reported by Electrek. The company expects to ramp up production of that new Model Y by the end of the year, when the lower-cost Model Y will likely give the existing, more expensive Model Y a run for its money.

“The desire to buy the car is very high, just people don’t have enough money in the bank account to buy it,” Musk said on the call. “So the more affordable we can make the car, the better.”