Tesla saw its deliveries slump in the first quarter for the first annual drop since the start of the pandemic in 2020, missing analyst forecasts by a mile in a sign that even price cuts haven’t been able to stave off an increasingly heated competition on the EV market.
Tesla said on Tuesday that it had produced over 433,000 vehicles and delivered about 387,000 vehicles, attributing the lower deliveries to “the early phase of the production ramp of the updated Model 3 at our Fremont factory and factory shutdowns resulting from shipping diversions caused by the Red Sea conflict and an arson attack at Gigafactory Berlin.”
Tesla paused EV production at its Giga Berlin factory, its largest in Europe, for two weeks at the end of January and early February, due to a lack of components as the Red Sea attacks on shipping strained supply chains.
The lower deliveries, also lower than the more than 410,000 analysts had expected, sent Tesla’s stock down by 5% on Tuesday. So far this year, Tesla’s shares have plunged by 33%, with the EV maker the second-worst performer in the S&P 500 index, per estimates by The Wall Street Journal.
The sales drop could be a sign of weaker overall demand for EVs and a sign that Tesla now faces stiffer competition from both Chinese EV manufacturers and legacy automakers in the West.
Tesla has reduced the prices of its Model Y and Model 3 EVs in several European countries and China to compete with low-cost vehicles from automakers like BYD.
But even the price cut wasn’t enough to lift Tesla’s deliveries in the first quarter of the year.
“While we were anticipating a bad first quarter, this was an unmitigated disaster that is hard to explain away,” Wedbush Securities analyst Dan Ives, who is still bullish on Tesla long-term, wrote in a note carried by CNN.
“We view this as a seminal moment in the Tesla story for Musk to either turn this around and reverse the black eye first quarter performance,” Ives said.
“Otherwise, some darker days could clearly be ahead that could disrupt the long-term Tesla narrative.”
By Tsvetana Paraskova for Oilprice.com
