By the end of the first quarter, Wall Street analysts were doubting their models about Tesla Inc. One after another, they lowered their projected car delivery costs.
They did not make nearly enough cuts.
In the first three months of the year, the Elon Musk-led electric vehicle (EV) manufacturer delivered a mere 386,810 units, missing Bloomberg’s average projection by the largest margin in seven years of data.
In New York, Tesla’s stock dropped 4.9%, bringing its 2024 decline to 33%—the second-worst percentage in the S&P 500 Index.
During the quarter, numerous red flags increased.
First, Tesla issued a warning that it will see a “notably lower” growth rate this year. The company attributed this to interest rate hikes, which have prevented many people from affording its cars even as it has slashed pricing.
The corporation had to contend with several setbacks at its plant outside of Berlin.
Musk’s divisive posts on X turned off potential customers, making the Chinese EV market even more competitive.
Despite those obstacles, most people still thought Tesla would sell more cars than it did a year ago. Instead, deliveries declined by 8.5%.
“Anyway you put it, it was ugly,” said Gene Munster, managing partner of Deepwater Asset Management.
“Demand is soft. Interest rates are still high. Is Elon’s brand damaging Tesla sales in the United States? It’s directionally a negative.”
96% of deliveries during the quarter comprised the Model Y sport utility vehicle and the updated Model 3 sedan, which Tesla attributed in part to the drop in sales.
It also mentioned the possible arson assault that cost it days of production in Germany and shipping difficulties connected to the Red Sea.
Despite this, Tesla produced 46,561 more vehicles in the quarter than it delivered to consumers, one of the biggest disparities in its history.
“Beyond the known production bottleneck, there may also be a serious demand issue,” Emmanuel Rosner, a Deutsche Bank analyst with a “buy” rating on Tesla’s stock, wrote in a report.
Two weeks before the automaker’s announcement, Rosner lowered his forecast for Tesla deliveries twice while still overestimating the company’s sales by more than 24,000 cars.
