Tesla reported its first quarterly drop in deliveries in almost four years. The company also missed Wall Street’s estimates. This is a sign the price reductions are no longer having the desired effect as it battles increased competition and weaker consumer demand.
Elon Musk has led the company since 2008. The company delivered 386.810 electric vehicles from January to March. This is almost 9% less than the 423,000 cars it sold during the same time period last year and well below forecasts for 457,000.
The decline of the world’s most valued carmaker was attributed in part to the introduction of a new version of the Model 3 sedan at its Fremont, California factory, plant closures due to shipping diverts away from the Red Sea, and an arsonist attack which knocked out electricity at its German facility.
Tesla, a company based in Austin Texas, forecast “significantly lower” growth for this year. The company said that it was in between two major growth waves. One from global expansion for its Models 3 & Y, and the second from Model 2, a smaller vehicle with lower prices.
Tesla reduced its prices by as much as $20,000 in the United States for certain models last year. In March, it temporarily reduced the Model Y’s price by $1,000. Investors were rattled by the reductions in profit margins.
Tesla shares lost around $33 billion by the time New York closed last night. The stock fell by $8.59 or 4.9 percent to $166.63. This value is $531 billion less than the $1 trillion it will be worth in April 2022.
Dan Ives of Wedbush Securities who raised his target price from $310 to $350.00 in December said the latest Tesla figures were an “unmitigated catastrophe” and were “hardly explainable.” Musk has a chance to make a major change in the Tesla narrative by turning this around. If not, Tesla’s long-term narrative could be disrupted by darker days. Musk sees this as a “fork in road” moment to help Tesla get through this turbulent time.”
Ives’ rating for the stock was “outperform”, but he cut his price target by one year to $300. He estimated China sales dropped by as much as 4 percent during that period. The quarterly earnings figures are due to be released on the 23rd of April.
However, there was one positive for Tesla. BYD, China’s largest electric vehicle manufacturer, reported that first-quarter sales were down 43 percent compared to the previous three month period. This may mean that BYD will give the title world’s biggest seller of electric vehicles back again to Tesla, after it won it last year.
BYD sold 139,902 pure electric vehicles in March, an increase of 36.3% year-on-year. Sales of plug-in hybrids increased by 56.4% to 161,729 cars.
BYD responded to the price war that Tesla began in China early last year by slashing prices between 5 and 20% on its latest models.