Shares plunge, extending biggest rout in the S&P 500
They didn’t cut by nearly enough.
A myriad of red flags went up throughout the quarter. First, Tesla warned its rate of growth will be “notably lower” this year, blaming interest-rate hikes that have kept its cars out of reach for many consumers even as it slashed prices. The company dealt with multiple disruptions at its plant outside Berlin. Musk engaged in inflammatory posting on X, turning off prospective buyers, and China’s EV market grew even more cutthroat.
Despite all those evident headwinds, most still expected Tesla to sell more vehicles than a year ago. Instead, deliveries ended up dropping 8.5 per cent.
“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 U.S.? It’s directionally a negative.”
Tesla blamed the decline in part on its changeover to an upgraded version of the Model 3 sedan, which along with the Model Y sport utility vehicle accounted for 96 per cent of deliveries in the quarter. It also cited Red Sea-related shipping delays and the suspected arson attack that cost it days of production in Germany.
Still, Tesla produced 46,561 more cars than it handed over to customers in the quarter.
“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. He’d cut his deliveries estimate twice in the course of just over two weeks leading up to the carmaker’s release and still overestimated the company’s sales by more than 24,000 vehicles.
Tesla doesn’t break out quarterly vehicle sales by region, but the U.S. and China have long been its biggest markets. The company makes the Model S, X, 3 and Y in Fremont, Calif., and the Model 3 and Y in Shanghai. It also produces the Model Y at its plants in Austin and outside Berlin.
Despite its challenges, Tesla managed to reclaim its title as the world’s top seller of EVs, snatching the lead back from China’s BYD Co. In the first quarter, BYD delivered 300,114 battery-electric vehicles globally. Including plug-in hybrids, the company sold 626,263 vehicles.
— With assistance from Catherine Larkin and Chester Dawson.