- Analysts have lowered their expectations for Tesla’s first-quarter deliveries
- Some predict that the automaker will deliver less in the first quarter of 2024 than last year
- That would be the first annual decline since the start of the pandemic
Wall Street is bracing for Tesla’s first sales decline in four years as demand for electric cars continues to decline.
Analysts at Deutsche Bank and Wedbush lowered their first-quarter shipment estimates due to multiple headwinds, including factory closures and increased competition.
On Tuesday, Tesla will announce how many cars it produced and delivered in January, February and March. Some experts think the number will be 15,000 lower than the same period last year.
The last time the country saw a year-on-year drop in deliveries was in the first half of 2020, when automakers had to close factories due to Covid-19.
The stock price has reversed course in the first three months of the year, falling more than 30 percent – the biggest decline of any S&P 500 company.
Elon Musk has said the company is ‘between two big waves of growth’
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The company delivered about 429,000 cars in the first quarter of 2023, but Deutsche Bank analysts have predicted that deliveries could fall to 414,000 in the first quarter of this year.
“We believe volume and earnings concerns could further dampen investor sentiment and put significant pressure on stocks,” they wrote in a report on March 28.
And investment firm Wedbush recently said in a note that deliveries this quarter have been a “nightmare.”
Analysts say if Tesla reports more than 420,000 cars, that would be a relief for investors, but it could also have sold fewer than 410,000.
Wedbush said first-quarter delivery estimates “are now up from 475,000 to 425,000 as Tesla saw a perfect storm of demand issues hit this quarter.”
Both Wedbush and Deutsche Bank pointed to headwinds in China as justification for the low projections.
“The largest and most concerning issue for Tesla (and its investors) remains China, as increasing competition in electric cars and an ongoing price war have made this key market very challenging for Tesla over the past year and especially the last quarter,” according to Wedbush’s note.
Other setbacks in the first quarter included the closure of the factory near Berlin, Germany, and the slowdown of production at a California factory as it switched to producing an upgraded Model 3.
Chinese automaker BYD, once mocked by Elon Musk, overtook Tesla in deliveries in the fourth quarter of last year.
Analysts said if Tesla reports deliveries of more than 420,000 in the first quarter, it would be a relief to investors
The threat it poses has persisted this year. On Tuesday, the Warren Buffet-backed company reported a 13 percent increase in sales from a year earlier in the first quarter.
In recent months, BYD has launched the Qin Plus EV and the Seagull, with a starting price of $15,200 and $10,000 respectively.
Musk previously hinted that delivery figures could fall when he told investors in January that the company is “between two big waves of growth.”
He claimed that the first wave was caused by the introduction of affordable models such as the Model 3, which launched in 2017, and later the Model Y, which launched in 2022. The two vehicles are among the best-selling electric vehicles in the world.
According to Reuters, Tesla is not expected to start producing an even more affordable next-generation car until the end of next year. The sales problems may therefore continue for some time.