Tesla's sales plunge amidst growing competition and slowing EV market

Tesla’s sales plunge amidst growing competition and slowing EV market

Tesla’s recent sales decline, coupled with increased competition and sluggish electric vehicle market, has raised concerns about the company’s future

Despite delivering 386,810 vehicles worldwide in the first quarter of 2024, nearly 9 per cent lower than the same period last year, Tesla fell short of Wall Street expectations by over 15 per cent (AP)

Tesla’s sales took a significant hit in the first quarter of calendar year 2024, as global competition intensified, the growth of electric vehicle (EV) sales slowed, and price reductions failed to attract more buyers. The company announced on Tuesday that it delivered 386,810 vehicles worldwide from January to March, nearly 9 per cent lower than the 423,000 vehicles sold in the same quarter last year.

The sales figures fell short of even the most pessimistic Wall Street expectations, with analysts expecting 457,000 vehicle deliveries from Tesla, a report by AP stated. This represented a shortfall of over 15 per cent. The company attributed the decline in part to several factors, including 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 supply to its German factory.

In January, Tesla had predicted “notably lower” sales growth for the year, citing the transition between two major growth phases—one from the global expansion of the Models 3 and Y, and another from the upcoming Model 2, a smaller and more affordable vehicle with an unspecified release date.

Also Read : BYD’s Q1 sales decline may yield top EV seller title back to Tesla

Tesla’s strategy of significantly lowering prices, including up to $20,000 for some models last year, and temporarily reducing the price of the Model Y by $1,000 in March, impacted the company’s profit margins and unsettled investors. Analysts had expected the average selling price for the Model Y to be $41,000 last quarter, $5,000 lower than a year ago and $15,000 lower than its peak in June 2022.

Wedbush analyst Dan Ives described the sales figures as “an unmitigated disaster” and emphasised the need for CEO Elon Musk to turn the company around. Ives maintained his Outperform rating but reduced his one-year price target from $315 to $300.

Analysts are now revising their expectations for Tesla’s quarterly earnings, with Citi Analyst Itay Michaeli lowering the full-year 2024 earnings per share estimate to $2.71 from $2.78. Tesla’s sales struggle comes amidst a slowdown in the U.S. electric vehicle market, which grew 47 per cent last year but saw growth taper off toward the end of the year, with a 34 per cent increase in December.

First Published Date: 03 Apr 2024, 06:19 AM IST

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