Tesla’s Quarterly Deliveries Fall for First Time Since 2020
Story by Rebecca Elliott
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Tesla reported its first year-over-year decline in quarterly deliveries since 2020, badly missing Wall Street’s expectations and stoking further concern about the company’s growth prospects this year.
Elon Musk’s electric-vehicle maker delivered 386,810 vehicles globally in the first three months of 2024, down 8.5% from a year earlier. It was the company’s lowest quarterly performance since the third quarter of 2022.
The result was enough for Tesla to reclaim the title from China’s BYD as the world’s top electric-vehicle seller on a quarterly basis. Yet, it is a troubling sign for the world’s most valuable automaker and the overall EV market, where growth is slowing and automakers are recalibrating investment plans after finding consumers to be less enthusiastic about going electric than the companies had expected.
The first-quarter results rattled investors, sending shares down about 5% Tuesday. The company’s stock has fallen 33% this year through Tuesday, making it the second-worst performer in the S&P 500 index, ahead of only health insurer Humana.
The softer-than-expected deliveries tally raises questions about underlying consumer demand, and calls into question whether Tesla will be able to achieve even modest growth this year, Deutsche Bank analyst Emmanuel Rosner wrote in a note to investors.
Analysts had slashed their expectations for Tesla’s first-quarter performance over the past several weeks. Those surveyed by FactSet forecast Tesla would deliver around 457,000 vehicles globally in the first quarter, though that reflects some stale estimates. Others expected results to be weaker.
Tesla attributed the result partly to production setbacks in the first three months of the year.
First, the company halted output at its plant in Germany for two weeks beginning in late January, citing parts shortages stemming from attacks on ships in the Red Sea. Then, in March, the assembly line ground to a halt once more after an arson attack on the grid that supplies power to the factory.
Meanwhile, Model 3 production tumbled in the U.S. as the company introduced its refreshed version of the car domestically.
Tesla produced 433,371 vehicles in the first quarter, down from 440,808 in the first three months of 2023. Most of them were Model Y crossovers and Model 3 cars. The company didn’t disclose how many Cybertruck pickups it produced.
The gap between production and deliveries suggests “that beyond the known production bottleneck, there may also be a serious demand issue,” Deutsche Bank’s Rosner said.
Other major automakers reported first-quarter U.S. sales throughout the day Tuesday, with investors paying particularly close attention to electric-vehicle deliveries as growth decelerates.
Asian automakers posted solid U.S. sales for the quarter, including Toyota Motor’s 20% jump. The Japanese car manufacturer said sales of gas-electric hybrid vehicles—which have surged in the U.S. as EV growth slows—propelled the company’s results.
Electric-vehicle sales from the traditional automakers were mixed. Hyundai Motor’s EV sales doubled in the first quarter, helped by the Ioniq 6 sedan. General Motors saw EV sales decline about 20% in the first quarter, while overall U.S. deliveries fell 1.5%.
EV-maker Rivian’s first-quarter deliveries rose 70%, to about 13,600 vehicles, better than Wall Street analysts had expected. The company stood by its full-year production forecast of 57,000 vehicles.
Wall Street is bracing for Tesla’s deliveries to grow little, if at all, in 2024, given the company’s aging lineup and elevated interest rates. As of February, the average annual percentage rate on a new-car loan was around 7.1%, up from 4.4% two years earlier, according to Edmunds.
Tesla’s slowdown represents a sharp change of fortunes for the world’s most valuable carmaker, whose success opened the floodgates for investment in battery-powered vehicles.
After years of chasing 50% annual growth on average, the high-flying carmaker has warned of “notably lower” growth in 2024, and Chinese rivals are nipping at its heels.
BYD, which briefly became the world’s top seller of EVs in the fourth quarter, sold 300,114 all-electric vehicles globally in the first three months of the year, up 13% from the same period in 2023. It offers EVs that are less expensive than Tesla’s and sells mostly in China.
China is the world’s largest car market with a fiercely competitive electric-vehicle industry, where Tesla is facing growing pressure from domestic players.
The global electric-vehicle market expanded around 35% year-over-year in the first quarter, according to GlobalData estimates. U.S. sales of all-electric vehicles were poised to climb about 17% during the period.
Tesla is facing a drought of new products, with its highly anticipated low-cost car not expected until late 2025 at the earliest.
Meanwhile, Musk, the chief executive, is pushing to increase use of the company’s driver-assistance package dubbed “Full Self-Driving Capability.” The technology, which doesn’t make cars fully autonomous, could bring in additional software revenue, bolstering the company’s bottom line. Tesla recently began offering customers a one-month free trial of the technology, which normally costs $12,000 outright or $199 a month as a subscription.
Tesla is scheduled to report first-quarter financial results on April 23. Analysts surveyed by FactSet expect Tesla to report a quarterly profit of $1.8 billion, down roughly 27% from the first three months of 2023 as the company’s recent price cuts weigh on profitability. It would be the company’s lowest quarterly profit in more than two years.
Revenue is expected to climb some 4% year-over-year to $24.3 billion, according to FactSet.
Morgan Stanley analyst Adam Jonas, who has long been bullish about Tesla, wrote in a recent note to investors that the automaker “may be witnessing price-cut fatigue” as profitability narrows.
“Such conditions may not significantly improve near-term given the age of Tesla’s product line-up,” he wrote.
