Tesla Sales Drop 8.5% in Q124

Tesla faced a setback in the first quarter of 2024 as its sales plummeted by 8.5% compared to the same period last year, according to data released by the company on Tuesday. The delivery of 386,810 vehicles fell short of both market expectations and its own previous performance, leading to a decline in its stock value.

The company had anticipated an average of around 430,000 deliveries for the first three months of the year, but actual numbers fell below that mark. The sales figures triggered a 7.35% drop in Tesla's stock before North American markets opened.

Tesla attributed the decline in sales to several factors, including the phased introduction of an updated Model 3 sedan at its California factory, disruptions due to shipping diversions in the Red Sea, and an arson attack that impacted its German factory.

The company's attempts to stimulate demand through price cuts also fell short. Despite lowering prices by as much as US$20,000 for some models last year, and offering temporary discounts in March, Tesla's profit margins were squeezed, and investor confidence waned. The average selling price for its popular Model Y dropped to US$41,000 last quarter, lower than previous estimates.

Shares of Tesla continued their downward trend, dropping by 5.5% in Tuesday morning trading. Dan Ives, Analyst, Wedbush, expressed concern over the dismal sales performance. Ives described the first quarter as an "unmitigated disaster" and warned of potential disruptions to Tesla's long-term narrative if the company fails to reverse its fortunes.

The challenges faced by Tesla reflect broader shifts in the electric vehicle market. While EV sales surged by 47% in the U.S. last year, reaching a record 1.19 million vehicles, growth has slowed in recent months. December saw a modest increase of 34%, indicating a more subdued trajectory for the industry.

Analysts are revising their expectations for the company's future performance. Itay Michaeli, Analyst, Citi adjusted his full-year 2024 earnings per share estimate downwards in response to the softer-than-expected first-quarter sales.

As Tesla grappled with a significant sales decline in the first quarter of 2024, China's electric vehicle (EV) giant BYD experienced its own challenges, leading to a reshuffling of the global EV sales leaderboard.

BYD, China's largest EV maker, reported a 43% drop in sales compared to the previous quarter, relinquishing its title as the world's top EV seller to Tesla. Tesla's first-quarter deliveries of 386,810 vehicles, though lower than previous periods, were sufficient to reclaim the top position.

The decline in Tesla's sales was attributed to softer demand and increased competition in the Chinese market, where local rivals, including BYD, intensified their efforts in a price war for buyers. Despite this, Tesla managed to maintain a slight increase in China-made vehicle sales in March.