On April 3rd, Tesla, the electric car giant, disclosed its first-quarter vehicle delivery volume for the year 2024. According to the report, Tesla delivered a total of 386,810 vehicles during the quarter, marking an 8.5% decrease compared to the same period last year. This signifies the first year-over-year decline in quarterly deliveries for Tesla since the production halt caused by the COVID-19 pandemic in 2020, leading to a subsequent drop in the company's stock price.
In terms of production, Tesla's total output for the first quarter reached 433,371 vehicles, representing a year-over-year decrease of approximately 1.7%, but a 12.5% decrease from the previous quarter. In comparison, during the first quarter of 2023, Tesla delivered and produced 422,875 and 440,808 vehicles, respectively, which then increased to 484,507 and 494,989 vehicles by the fourth quarter of 2023.
It is worth noting that Tesla did not provide a detailed breakdown of sales by vehicle model. However, it mentioned that a total of 412,376 units of Model 3 and Model Y were produced during the first quarter, with 369,783 units successfully delivered. Additionally, 20,995 units of other models were produced, with 17,027 units delivered.
Tesla's first-quarter delivery volume fell significantly below market expectations. According to FactSet data, analysts' average expectation for Tesla deliveries was approximately 457,000 vehicles, with estimates ranging from a low of 414,000 to a high of 511,000 vehicles. The latest forecasts in March adjusted the delivery volume expectation to be between 414,000 and 469,000 vehicles.
Furthermore, Martin Viecha, Tesla's Investor Relations Director, shared a compilation of data from internal company sources and forecasts from 30 analysts with investors last week. According to this data, analysts expect Tesla's average delivery volume for the second quarter to reach 443,027 vehicles, with a median of 431,125 vehicles.
With the performance decline being notably alarming, major mainstream media outlets abroad have commented following Tesla's announcement of car production and delivery data:
CNBC: Tesla Faces Internal and External Challenges in Q1 Tesla encountered numerous challenges in the first quarter of 2024. At the beginning of the year, the Red Sea Attack severely disrupted Tesla's supply chain, forcing its Berlin-area factory to halt production. Shortly thereafter, environmental activists' aggressive actions once again posed difficulties for Tesla, as they set fires destroying infrastructure around the German factory, making it difficult for Tesla to obtain sufficient power support, thus hindering production progress. Simultaneously, in the Chinese market, Tesla faces strong competition from domestic electric vehicle manufacturers. Traditional carmakers like BYD, as well as emerging players like Xiaomi, have entered the battlefield, squeezing Tesla's market share significantly. During January and February, Tesla's sales data in China were poor, prompting adjustments to production strategies at the Shanghai factory, reducing the production of Model 3 and Model Y and reducing workers' work time from six and a half days to five days a week. In the United States, Tesla's new models did not receive the enthusiastic reception as expected. Since December last year, the electric pickup truck Cybertruck has been sold in small batches, but the market feedback has been mixed, failing to ignite a sales boom. For Tesla, previously effective discounts and incentive policies in stimulating sales seem to have lost their magic. To reverse the downturn, Musk took emergency measures at the end of the first quarter, instructing all sales and service personnel to demonstrate the company's latest driver assistance system to North American customers before car delivery. However, this system, claimed to be "Fully Self-Driving" (FSD), has not fulfilled its promise of true autonomous driving. Research data from Caliber shows a slight decrease in Tesla's potential customer base in the first quarter of 2024. The report suggests that this trend is partially due to Elon Musk's personal image. Although Musk believes that regardless of his political stance and provocative remarks on social media, Tesla's consumers and shareholders will still steadfastly support the brand, the reality seems to be different. The Wall Street Journal: Decline in Delivery Volume Sparks Concerns about Growth Prospects Tesla's recent report shows that for the first time since 2020, the company's quarterly delivery volume has declined year-over-year, far below Wall Street expectations, sparking further concerns among analysts about Tesla's growth prospects for the year. While Tesla's first-quarter delivery performance is sufficient to reclaim the title of global quarterly sales champion of electric vehicles from BYD, for the world's highest-valued car manufacturer, this number brings considerable unease. This has also caused significant ripples in the entire electric vehicle market, prompting car manufacturers to reassess investment strategies and realizing that consumer enthusiasm for electric vehicles may not have reached the expected level. Emmanuel Rosner, an analyst at Deutsche Bank, mentioned in his latest research report that the lower-than-expected delivery volume in the first quarter not only raises questions about potential consumer demand but also raises doubts about whether Tesla can achieve the minimum annual growth target. He further pointed out that the significant difference between production and delivery "not only reflects well-known production bottlenecks but may also imply deeper demand issues." The Washington Post: Q1 Delivery Volume Decline is a Disappointing Start Tesla's recent report shows a significant decline in car delivery volume in the first quarter of this year, which is undoubtedly a disappointing start for a company that has recently faced market challenges and reputational risks. Tuesday's delivery data release coincides with Tesla being in the midst of multiple woes: sluggish demand for electric vehicles, a high-interest-rate environment, ongoing technical lawsuits, and continuous controversies surrounding the company's founder, Musk. Musk had already warned in January's earnings call that Tesla might face a significant slowdown in growth this year as the company shifts its focus to developing next-generation vehicles, with plans to begin production in 2025.
Gene Munster, a senior analyst at Loup Ventures, attributes Tesla's "poor delivery numbers" to a decline in macroeconomic conditions and waning enthusiasm in the electric vehicle market. Munster took to Twitter to note that higher interest rates have increased the cost of car loans, particularly for higher-priced electric vehicles, further stating, "Enthusiasm for electric vehicles has cooled, further dampening sales."
Karl Brauer, Executive Analyst at ISeeCars.com, also points out, "Musk has never encountered a demand issue before, but over the past year-plus, increasing signs suggest he's overproducing vehicles relative to demand."
Reuters: "An Outright Disaster"
Analysts bluntly describe Tesla's performance as "ugly," as even with price cuts, Tesla has failed to spur new demand in a fiercely competitive market. Dan Ives, an analyst at Wedbush Securities, describes Tesla's first-quarter performance as "a train wreck hitting a brick wall," implying this as a significant challenge facing Tesla. Ives comments, "Let's call it like it is: while we expected a soft quarter, the reality was much worse, with no plausible explanation." He continues, "We view this as a pivotal moment in Tesla's history, where Musk needs to take action to reverse this quarter's adversity... Otherwise, potentially darker days lie ahead, which will impact Tesla's long-term narrative."
BI: Investors Fear Losing Market Share
Quarterly delivery data reveals Tesla once again proving its formidable competitiveness in global electric vehicle sales, reclaiming the title of the world's largest electric vehicle seller from BYD.
However, both of these electric vehicle giants face significant challenges this year. Increasing signs indicate consumer interest in electric vehicles is cooling, with attention shifting towards more affordable hybrid models.
With the disclosure of delivery volumes, Tesla's stock has taken a hit, dropping nearly 5%. This market reaction underscores investors' deep concerns about Tesla's failure to meet delivery expectations. Additionally, some investors worry that Tesla may lose some market share in future market competition, especially with emerging competitors like Xiaomi, who recently launched their first electric vehicle.
The New York Times: Will Declining Sales Make Tesla Lose Market Dominance?
With Tesla's significant decline in quarterly sales data announced on Tuesday, the manufacturer leading the electric vehicle revolution appears to be losing control of the market it pioneered. This further exacerbates doubts about Musk's leadership.
The decline in Tesla's sales has unnerved investors, especially as competitors like China's BYD, South Korea's Kia and Hyundai report growth in their electric vehicle sales. This contrast indicates that Tesla's challenges are not just due to a general slowdown in electric vehicle market demand.
Tesla successfully defined electric vehicles with its Model 3 and Model Y, demonstrating the potential to combine attractiveness, practicality, and profitability in electric vehicles. This feat not only fundamentally changed the direction of the automotive industry but also prompted several traditional automakers to accelerate the launch of their electric models.
However, market trends seem to be turning against Tesla. Unlike the consumers who initially drove Tesla's rise, today's mainstream market consumers seem to prefer traditional vehicle designs, such as rich interiors and physical buttons and switches. Tesla's models rely almost entirely on large screen controls, a non-traditional design that may gradually lose favor with some consumers.
Moreover, Tesla's online sales model and limited showroom numbers often face complaints about poor service quality. In contrast, traditional automakers like Ford and General Motors have extensive dealer networks and are increasing their production of electric vehicles, which may give them an advantage in terms of service.
Bloomberg: Delivering 2 Million Cars This Year Seems Difficult
As of Tuesday, expectations for Tesla's first-quarter car delivery volumes have been repeatedly lowered. A year ago, analysts estimated Tesla's first-quarter sales at about 530,000 vehicles. However, over time, expectations have decreased from 500,000 vehicles to close to 450,000 vehicles. Ultimately, Tesla's actual delivery volume was only 387,000 vehicles, 14% lower than the adjusted expectations.
The overall market trend is showing weakness. Despite Tesla's launch of the electric pickup truck in late 2023, sales were only about 17,000 vehicles, within the typical range of 15,000 to 20,000 vehicles. Sales of core models Model 3 and Model Y also fell short of expectations, hitting their lowest point since the summer of 2022.
Falling short of analysts' basic expectations, Tesla is faced with the need to adjust its first-quarter financial forecasts. A series of price reduction strategies since early 2023 has failed to stimulate sales effectively, instead squeezing profit margins. This suggests that Tesla's upcoming financial report may be disappointing. Given Tesla's massive investment in the electric pickup truck and the potential sales downturn of Model S and Model X, these factors are expected to put pressure on Tesla's profit margins. Additionally, the significant increase in inventory will also put enormous pressure on the company's cash flow. Throughout the year, analysts had forecasted that Tesla's deliveries would surpass 2 million vehicles in 2024, indicating a growth rate of just 11%. However, with the latest data release, Tesla now needs to sell an average of 543,000 vehicles each quarter for the remainder of the year to meet this target. Yet, Tesla's best-ever quarterly sales historically have only reached around 485,000 vehicles.
