1st quarter Tesla sales drop 9% from ’23
DETROIT — Tesla sales fell sharply last quarter as competition increased worldwide, electric vehicle sales growth slowed, and price cuts failed to lure more buyers.
The Austin, Texas, company said Tuesday that it delivered 386,810 vehicles worldwide from January through March, almost 9% below the 423,000 it sold in the same quarter of last year.
Sales also fell short of even the most bearish Wall Street expectations. Auto industry analysts polled by FactSet were looking for 457,000 vehicles deliveries from Tesla Inc. That’s a shortfall of more than 15%.
The company blamed the decline in part on phasing in an updated version of the Model 3 sedan at its Fremont, Calif., factory, plant shutdowns because of 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 with an unknown release date.
“This was an unmitigated disaster 1Q that is hard to explain away,” wrote Dan Ives, an analyst with Wedbush that has been very bullish on Tesla’s stock. The drop in sales was far worse than expected, he said in a note to investors.
The quarter is a “seminal moment” in the Tesla growth story, Ives wrote, adding that Chief Executive Officer Elon Musk will have to turn the company around. “Otherwise, some darker days could clearly be ahead that could disrupt the long-term Tesla narrative.”
Ives maintained his outperform rating and cut his oneyear price target from $315, to $300.
“Street criticism is warranted as growth has been sluggish and (profit) margins showing compression, with China a horror show and competition increasing from all angles,” Ives wrote.
Tesla dramatically lowered U.S. prices by up to $20,000 for some models last year. In March it temporarily knocked $1,000 off the Model Y, its topselling vehicle. Those price cuts narrowed the company’s profit margins and spooked investors.
Analysts polled by FactSet expected the average selling price for Model Y to be $41,000 last quarter, $5,000 less than a year ago and $15,000 lower than the peak of $56,000 in June of 2022.
Shares of Tesla tumbled $8.59, or 4.9%, to close Tuesday at $166.63, 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.