Achi news desk-
DETROIT –
Tesla’s sales fell sharply last quarter as competition increased around the world, electric vehicle sales growth slowed, and price cuts failed to attract more buyers.
The Austin, Texas company said it delivered 386,810 vehicles between January and March, nearly 9 percent lower than the 423,000 it sold in the same quarter last year.
Sales also fell short of the most bearish Wall Street analyst expectations. Analysts polled by FactSet expected Tesla Inc. delivered 457,000 vehicles.
The company blamed the drop in part on the phasing out of an updated version of the Model 3 sedan at its Fremont, California plant, plant shutdowns due to shipping diversions in the Red Sea, and an arson attack that devastated power to their factory in Germany.
In its January letter to investors, Tesla predicted “significantly lower” sales growth this year. The letter said Tesla is between two major growth waves, one from the global expansion of the Models 3 and Y, and the second from the Model 2, a smaller and less expensive new vehicle.
Last year Tesla dramatically reduced US prices by up to US$20,000 for some models. In March it temporarily knocked US$1,000 off the Model Y, its best-selling vehicle. The declines cut into the company’s profit margin, which spooked investors.
Tesla shares fell 5.5 percent in Tuesday morning trading to US$165.60, continuing an extended decline. Investors have shaved about 34 percent off the company’s value so far this year, dumping shares after the tremendous growth story Tesla has been telling has intensified.
Wedbush analyst Dan Ives, who is usually bullish on the stock, wrote in an investor note on Tuesday that sales were much worse than expected. “This was an unmitigated 1Q disaster that is hard to explain away,” he wrote. “
He wrote that the quarter was a “breakthrough moment” in Tesla’s growth story, and that CEO Elon Musk will have to turn the company around. “Otherwise, it’s clear that there could be some darker days ahead that could disrupt Tesla’s long-term narrative.”
Ives managed to maintain its Outperform rating and cut its one-year price target from US$315 to US$300.
“Street criticism is justified as growth has been sluggish and (profit) margins are showing compression with China a horror show and competition increasing from all angles,” Ives wrote.
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 slipped three to four percent during the period.
Deliveries of the Model 3 and Y, Tesla’s top sellers by far, fell 10.3 percent year over year to 369,783. Sales of the company’s other models, the old X and S and the new Cybertruck, rose nearly 60 percent to 17,027. Tesla produced 10 percent more vehicles than it sold during the first quarter.
Softer-than-expected first-quarter sales are reducing analysts’ 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 US$2.71 from US$2.78.
Tesla’s sales come against the backdrop of a slowing market for electric vehicles in the
