The stock of EV maker Tesla fell Tuesday after revealing a big first-quarter delivery shortfall, raising electric vehicle (EV) demand concerns.
Elon Musk's EV company produced 433,000 cars in the first quarter of 2024, down 12% from the previous quarter. Tesla supplied 387,000 units, 20% lower than the previous quarter. According to analysts' estimates, Tesla would deliver over 400,000 automobiles, according to a Fox News report.
Tesla shares fell 5% on Monday and over a third since Januaryas it faces severe competition from Ford, GM, Mercedes, and Chinese EV producers. Moreover, EV sales are dropping as purchasers now prefer gas-powered cars.
Tesla Blames Increased Competition, Arson Attack
The EV market situation prompted Tesla to lower pricing to remain competitive. Though the EV manufacturer is more lucrative than traditional automakers, but price decreases damage profits and stock performance. Investors' optimism that Tesla would improve sales supported its high stock price, making it the world's most valuable car manufacturer.
Slow EV sales prompted Ford to decrease the Mustang Mach-E electric SUV's pricing by $8,100. Ford will reduce F-150 Lightning production at its Michigan Rouge Electric Vehicle Center to one shift starting April 1.
Tesla blamed the sales drop on the Fremont facility's expansion of the upgraded Model 3 and factory closures due to Red Sea incidents diverting ships from China to Europe. The company, with headquarters in Texas, also noted a week-long manufacturing stoppage in Germany following an arson attack.
However, the fiercer competition in the EV industry severely hurt demand. BYD overtook Tesla as the leading EV seller in the fourth quarter. It also confronts increased competition from major car manufacturers that are developing new EV models as they switch focus on electric vehicles.
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(Photo : FREDERIC J. BROWN/AFP via Getty Images)
Tesla co-founder and CEO Elon Musk stands in front of the shattered windows of the newly unveiled all-electric battery-powered Tesla's Cybertruck at Tesla Design Center in Hawthorne, California on November 21, 2019.
According to a CNN report, Wedbush Securities analyst Dan Ives predicted Tesla's sales to be 440,000-414,000. Despite his long-term optimism for Tesla shares, Ives called the quarter "a train wreck into a brick wall quarter."
According to Ives, Tesla's sales in China may have dropped 3% from the prior year. Early in 2024, Chinese demand was "very soft.".
Even though US EV sales rose 40% last year, major traditional automakers like General Motors and Ford have cut their EV production plans owing to growth rates falling short of predictions.
Tesla Rival Also Impacted By EV Market Slowdown
The slowdown in EV demand has not only impacted Tesla but also its rival Chinese EV maker BYD. TechTimes recently reported that a high-ranking official of the industrial park where the planned Vietnam facility will be built disclosed that the company decided to postpone the project.
BYD said it will construct an electric car plant in Phu Tho, the Vietnamese government announced in May. In this province, the Chinese firm makes Apple iPads.
Luong Thanh Tung, vice chairman of Gelex Group, which oversees the industrial park, said BYD delayed construction owing to strategic concerns and the electric vehicle market slowdown. Tung told the shareholders gathering in Hanoi that Gelex gave the EV facility 100 hectares (250 acres) of commercial property at the Phu Ha industrial park. Due to delays, both parties are seeking a project start date.
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