Tesla’s quarterly struggle: a downturn in deliveries

Deliveries from Elon Musk’s Tesla have dropped sharply in the first three months of the year as the EV firm tussled with a fire at its European factory, international shipping trouble, and other challenges.

Tesla, the pioneering electric car manufacturer, faced a significant setback in its first-quarter performance, reporting the lowest quarterly delivery figures in over a year. 

The company handed over just under 387,000 electric cars to customers, marking a more than 8% decline year-on-year and falling short of analyst expectations. The news sent Tesla’s shares tumbling more than 4%, reflecting investor concerns about the company’s trajectory.

Analyst Concerns and Market Response

Wedbush Securities analyst Dan Ives characterized the update as an “unmitigated disaster,” expressing disbelief at the disappointing figures. 

Tesla’s shares had already been under pressure due to challenges such as higher interest rates affecting affordability and increased competition from rival electric vehicle manufacturers. Despite repeated price cuts, demand in crucial markets like China has weakened, further exacerbating Tesla’s woes.

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First-Quarter Challenges

The first three months of 2024 proved particularly challenging for Tesla. Supply disruptions caused by Houthi attacks in the Red Sea temporarily shut down its factory in Germany, which was later targeted by an alleged arson attack. 

These incidents, coupled with production and delivery declines, painted a grim picture for the company’s performance. Analysts like Ives emphasized the urgency for Tesla and its CEO, Elon Musk, to navigate through this turbulent period effectively to avoid further trouble ahead.

Production and Delivery Declines

While production in the first quarter saw a marginal decrease of about 1.6% year-on-year, deliveries took a more significant hit, dropping over 8% compared to the same period in 2023. 

This marked the first annual decline in deliveries for any quarter since 2020 and a 20% decrease compared to the previous quarter. 

The downturn comes amid broader industry concerns about electric vehicle demand, although forecasts still anticipate significant growth in electric vehicle sales for the year.

Challenges Beyond Deliveries

In addition to delivery declines, Tesla faces scrutiny over its driverless car software and safety issues related to power steering, further complicating its path forward. 

As Tesla grapples with these challenges, its ability to navigate through this “fork in the road” moment will be crucial for its future success in an increasingly competitive electric vehicle market.