Tesla Posts First Decline in Deliveries in Four Years, Remains EV Market Leader

Tesla posted the first decline in deliveries in four years 6 photos
Photo: Tesla
Tesla steals most customers from Honda and ToyotaTesla steals most customers from Honda and ToyotaTesla price cuts are a punch in the gut to all other players in the EV arenaTesla price cuts are a punch in the gut to all other players in the EV arenaTesla price cuts are a punch in the gut to all other players in the EV arena
Tesla posted disappointing production and delivery numbers in the first quarter of 2024, well below Wall Street expectations. The EV maker delivered 386,810 EVs in the quarter, down 20.2% from the prior quarter and 8.5% from a year ago. It produced 433,371 vehicles during the period.
Tesla reported the production and delivery numbers for the first quarter of the year, and it was even worse than predicted. The EV maker missed Wall Street estimates, especially regarding deliveries, pointing to larger inventories than expected. This shows that the aggressive price cuts Tesla operated last year are starting to lose effect as the interest rates continue to stay high and interest in electric vehicles appears to calm down.

Tesla delivered only 386,810 electric vehicles in the three months through March 31, down 20.2% from Q4 2023 and 8.5% from Q1 2023. Wall Street analysts estimated an average of 454,200 vehicles delivered in the first quarter. The last time Tesla posted a decline in quarterly deliveries was in Q2 2020 when the pandemic forced the carmaker to shut down production.

This time, Tesla explained that the volume decline was partially caused by the upgrade works required at the Fremont factory for the updated Model 3. Ramping up production was also more difficult than estimated. Besides that, shipping diversions caused by the Red Sea conflict and the arson attack at Giga Berlin also led to production disruptions.

However, this doesn't explain why Tesla ended the quarter with a large gap between production and deliveries. This amounts to 46,561 vehicles, which means that more than 10% of the EVs Tesla produced in the quarter are still unsold. This shows that the end-of-quarter push didn't work as expected despite Tesla announcing price increases after April 1. The limited demand affected the Model Y the most. Tesla will likely be forced to reverse the price increase to clear inventory.

Although 2023 was a good year for Tesla, 2024 could prove a lot more challenging. The cooling of the EV market in the US and increased competition, especially in China, could put an end to the double-digit growth trend that Tesla enjoyed. The EV maker is well aware of this, as it warned during the Q4 2023 earnings call that it's in between growth waves, with the new one only expected in late 2025. This is when the next-generation compact EVs are expected to start deliveries.

Despite the disappointing results, Tesla remains the largest EV manufacturer in the world. That's because its main rival, BYD, also had a bad quarter, with only 300,114 EVs delivered in the first three months. BYD sold more than 526K EVs in Q4 2023, surpassing Tesla. However, the American carmaker retained the crown for 2023 and continues leading the way into 2024.
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About the author: Cristian Agatie
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After his childhood dream of becoming a "tractor operator" didn't pan out, Cristian turned to journalism, first in print and later moving to online media. His top interests are electric vehicles and new energy solutions.
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