Tesla’s first quarter of 2024 has been anything but smooth sailing. The electric vehicle giant reported on Tuesday that it delivered 386,810 vehicles, a figure that starkly contrasts with Wall Street’s expectations and marks a significant downturn from previous quarters. This shortfall has sent ripples through the market, with Tesla’s stock taking a nearly 6% hit in Tuesday morning trading.
The consensus among Wall Street analysts, tracked by FactSet, had anticipated a much healthier figure of 457,000 EVs for the first quarter. Even after a series of downward revisions by analysts, the actual sales figures reported by Tesla were startlingly lower. For instance, Deutsche Bank’s Emmanuel Rosner, who maintains a ‘buy’ rating on Tesla stock, had adjusted his forecast from 427,000 units to 414,000 units, while Morgan Stanley’s Adam Jonas had brought down his estimate from 469,000 units to 425,000 units. These revised estimates themselves were a response to what was described as a ‘nightmare’ first quarter by analysts.
The repercussions of these missed targets are evident in Tesla’s market performance. The company’s shares have plummeted by over 33% this year, making it the worst performer in the S&P 500. Moreover, Tesla has been dethroned from the top 10 U.S. companies by market capitalization, trailing behind giants like Visa and JPMorgan Chase.
The bulk of Tesla’s sales comprised the Model 3 compact cars and Model Y SUVs, with a smaller fraction attributed to other EVs including the Model X, Model S, and the newly released Cybertruck. However, production issues have been a thorn in Tesla’s side, with the company assembling fewer vehicles in the quarter compared to the same period in 2023. This downturn in production has been attributed to factory revamps, disruptions abroad, and even an arson attack near Tesla’s Giga Berlin-Brandenburg in Germany.
Despite these challenges, Tesla has not been idle in its efforts to boost sales. The company has committed to bi-weekly updates of its Full Self-Driving software and even offered a free one-month trial to U.S. Tesla owners. However, these measures have yet to translate into the expected surge in popularity, with Deutsche Bank analysts suggesting that there may be a ‘serious demand issue’ at play.
The narrative around Tesla is becoming increasingly complex, with some investors pointing fingers at CEO Elon Musk and the company’s board of directors. Tesla investor Ross Gerber expressed his concerns on X, Musk’s social media platform, calling for immediate replacement of the Tesla Board of Directors with independent directors. He also attributed Tesla’s sales struggles to Musk’s behavior, holding him responsible for the company’s predicament.
Tesla prepares for its earnings call on April 23, and the company faces a multitude of challenges. From production disruptions caused by militia attacks and arson to increased competition in China and mixed reviews for the Cybertruck in the U.S., Tesla’s path forward is fraught with obstacles. The company’s legal challenges and Musk’s controversial public persona have also done little to assuage concerns.
In the face of these headwinds, Tesla’s next moves will be closely watched. The company’s ability to navigate through this stormy period and reinvigorate its sales will be critical in determining its future trajectory. With the electric vehicle market evolving rapidly, Tesla’s response to these challenges will be a testament to its resilience and adaptability in an increasingly competitive landscape.
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