DETROIT– Tesla sales fell sharply last quarter as global competition increased, electric vehicle sales growth slowed and price cuts failed to attract more buyers.
The Austin, Texas-based company said it delivered 386,810 vehicles from January through March, down nearly 9% from the 423,000 it sold in the same quarter last year.
Sales also fell short of expectations from even the most bearish Wall Street analysts. Analysts polled by FactSet expected Tesla Inc. would supply 457,000 vehicles.
The company blamed the decline in part on the introduction of an updated version of the Model 3 sedan at its Fremont, California, plant, plant closures due to Red Sea diversions and an arson that knocked out power to the German plant.
In its January letter to investors, Tesla predicted “significantly lower” sales growth this year. The letter stated that Tesla is between two major waves of growth, one of the global expansion of the Models 3 and Y, and a second of Model 2, a new, smaller and cheaper vehicle.
Last year, Tesla dramatically cut prices in the US by as much as $20,000 on some models. In March, it temporarily cut $1,000 off the Model Y, its best-selling car. The cuts reduced the company’s profit margins, scaring investors.
Shares of Tesla fell 5.5% to $165.60 in Tuesday morning trading, continuing a long decline. Investors have shed about 34% of the company’s value so far this year, dumping shares after growing wary of the massive growth story Tesla has been telling.
Wedbush analyst Dan Ives, normally bullish on the stock, wrote in an investor note on Tuesday that sales were much worse than expected. “This was an unmitigated first quarter disaster that is difficult to explain away,” he wrote. “
He wrote that the quarter was a “seminal moment” in Tesla’s growth story, and that CEO Elon Musk will have to turn the company around. “Otherwise, there could clearly be dark days ahead that could disrupt the Tesla story in the long term.”
Ives maintained his Outperform rating and lowered his one-year price target from $315 to $300.
“Street criticism is justified because growth has been slow and (profit) margins are showing compression with China like a horror show and competition is increasing from all angles,” Ives wrote.
During the quarter, Tesla lost production time in Germany after a suspected arson disrupted power supplies. US production was slowed by an upgrade to the Model 3, and Ives estimated that Chinese sales fell 3% to 4% over the period.
Deliveries of the Models 3 and Y, which are by far Tesla’s best-selling units, fell 10.3% year over year to 369,783. Sales of the company’s other models, the aging X and S and the new Cybertruck, rose nearly 60% to 17,027. Tesla produced 10% more vehicles than it sold in the first quarter.
Softer-than-expected first-quarter sales lower analyst 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 $2.71 from $2.78.
Tesla’s sales come against the backdrop of a slowing electric vehicle market in the US. Electric vehicle sales grew 47% last year to a record 1.19 million, while electric vehicle market share rose to 7.6%. But sales growth slowed toward the end of the year. In December they rose by 34%.