Apr 2, 2024 - Economy

Tesla vehicle sales decline as EV interest cools

A white vehicle sits on a blue stand at a car show

A Tesla Model 3 on display during the Everything Electric London 2024 at ExCel on March 28 in London. Photo by John Keeble/Getty Images

Tesla's vehicle sales declined in the first quarter at a much faster pace than anticipated, as the automaker grapples with logistical challenges and softening interest in EVs.

Why it matters: As the world's largest maker of premium EVs, Tesla's performance is a close EV market barometer.

By the numbers: The automaker delivered 386,810 vehicles worldwide in the first quarter, down 8.5% from the same period a year earlier.

  • Analysts had expected deliveries of 443,000, according to Evercore ISI's Chris McNally.
  • Deliveries are a close approximation of sales.
  • It was the company's lowest quarterly sales since the third period of 2022.

The company also reported an unusually large gap between production and deliveries.

  • Tesla said it produced 433,371 units, down about 7,000 from a year earlier.

The impact: Disappointed investors drove down Tesla's stock by 5% in midafternoon trading.

Zoom in: CEO Elon Musk's company blamed the sales drop "partially due to the early phase of the production ramp of the updated Model 3 at our Fremont factory and factory shutdowns resulting from shipping diversions caused by the Red Sea conflict and an arson attack at Gigafactory Berlin."

  • Analysts say there's more to the story.
  • "Let's call this as it is: While we were anticipating a bad 1Q, this was an unmitigated disaster 1Q that is hard to explain away," Wedbush Securities analyst Dan Ives wrote today.
  • The company is facing "very soft" demand in China, while it also has little growth prospects on the horizon as the next-gen Model 2 vehicle won't arrive until at least 2025.

Zoom out: This is not just a Tesla problem.

  • Automakers — ranging from established giants to startups — are dealing with what Barclays analyst Dan Levy recently called a transition from "EV euphoria to EV winter."
  • EV startup Fisker is reportedly weighing a bankruptcy filing less than a year after fellow EV startup Lordstown Motors did the same.
  • Lucid Group, another startup, has been scrambling to cut costs.
  • And Ford recently slashed production plans for the F-150 Lightning, which had been heralded as a leader in the EV revolution.

What's next: Tesla reports first-quarter earnings April 23.

Editor's note: This report was updated with additional details throughout.

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