April 14th, 2024

Tesla sales fall nearly 9% to start the year as competition heats up and demand for EVs slows


By Tom Krisher, The Associated Press on April 2, 2024.

FILE - An Unsold 2023 Model X sports-utility vehicle sits outside a Tesla dealership Sunday, June 18, 2023, in Englewood, Colo. Tesla sales are expected to fall in the first quarter as demand for electric vehicles continues to slow. (AP Photo/David Zalubowski, File)

DETROIT (AP) – Tesla sales fell sharply last quarter as competition increased worldwide, electric vehicle sales growth slowed, and price cuts failed to draw more buyers.

The Austin, Texas, company said it delivered 386,810 vehicles from January through March, almost 9% below the 423,000 it sold in the same quarter of last year.

Sales also fell well short of Wall Street expectations. Analysts polled by FactSet expected Tesla Inc. to deliver 457,000 vehicles.

The company blamed the decline in part on phasing in an updated version of the Model 3 sedan at its Fremont, California, factory, plant shutdowns due to shipping diversions in the Red Sea, and an arson attack that knocked out power to its German factory.

In its letter to investors in January, Tesla predicted “notably lower” sales growth this year. The letter said Tesla is between two big growth waves, one from global expansion of the Models 3 and Y, and a second coming from the Model 2, a new smaller and less expensive vehicle.

Last year Tesla dramatically lowered U.S. prices by up to $20,000 for some models. In March it temporarily knocked $1,000 off the Model Y, its top-selling vehicle. The reductions cut into the company’s profit margins, which spooked investors.

Shares of Tesla tumbled 6.3% at the opening bell Tuesday, continuing an extended decline. Investors have shaved about 34% off the value of the company so far this year, dumping shares after growing leery of the tremendous growth story that Tesla has been telling.

Wedbush analyst Dan Ives, normally bullish on the stock, wrote in an investor note last week that first-quarter deliveries would be a “nightmare quarter” for Tesla.

Ives gave the stock an Outperform rating but cut his one-year price target from $315 to $300.

During the quarter, Tesla lost production time in Germany after a suspected arson attack cut its power supply. U.S. production was slowed by an upgrade to the Model 3, and Ives estimated that China sales slid 3% to 4% during the period.

Deliveries of the Models 3 and Y, which are by far Tesla’s top sellers, fell 10.3% year over year to 369,783. Sales of the company’s other models, the aging X and S and the new Cybertruck, rose almost 60% to 17,027. Tesla produced 10% more vehicles than it sold during the first quarter.

Ives wrote that investor patience is starting to wear thin.

“For Musk, this is a “˜fork in the road’ time to get Tesla through this turbulent period, otherwise darker days could be ahead,” Ives wrote.

Softer than expected first-quarter sales is reducing analyst expectations for quarterly earnings when they are released on April 23. Citi Analyst Itay Michaeli cut his full year 2024 earnings per share estimate to $2.71 from $2.78.

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