Tesla’s (NASDAQ:TSLA) first-quarter sales dropped nearly 9% amidst intensifying competition and a slowdown in demand for electric vehicles.
The company, based in Austin, Texas, reported delivering 386,810 vehicles from January to March, a decrease of almost 9% compared to the 423,000 vehicles sold in the same quarter last year.
Sales fell short of Wall Street estimates, with analysts surveyed by FactSet expecting Tesla Inc. to deliver 457,000 vehicles.
Tesla attributed the decline partly to the phased introduction of 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 disrupted power to its German factory.
In a letter to investors in January, the company forecasted “notably lower” sales growth for the year. The letter indicated that Tesla is in between two major growth phases: one from the global expansion of the Models 3 and Y, and another from the Model 2, a new, smaller, and less expensive vehicle.
Last year, Tesla significantly reduced prices in the U.S. by up to $20,000 for certain models. In March, it temporarily lowered the price of the Model Y, its top-selling vehicle, by $1,000. These reductions impacted the company’s profit margins, which concerned investors.
Shares of Tesla fell 7.4% at the opening bell on Tuesday. They have declined by approximately 30% so far this year as Wall Street has grown cautious of Tesla’s significant growth narrative.
Wedbush analyst Dan Ives, typically optimistic about the stock, noted in an investor note last week that first-quarter deliveries would be a “nightmare quarter” for Tesla.
Although Ives maintained an Outperform rating on the stock, he reduced his one-year price target from $315 to $300.
During the quarter, Tesla experienced production disruptions in Germany due to a suspected arson attack that disrupted its power supply. Production in the U.S. was also affected by an upgrade to the Model 3, and Ives estimated that sales in China decreased by 3% to 4% during the period.
Ives stated that investor patience is wearing thin.
“For Musk, this is a ‘fork in the road’ moment to guide Tesla through this turbulent period, or else darker days could lie ahead,” Ives wrote.
The softer-than-expected first-quarter sales are lowering analyst expectations for quarterly earnings, which are set to be released on April 23. Citi Analyst Itay Michaeli reduced his full-year 2024 earnings per share estimate from $2.78 to $2.71.
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