EV deliveries by electric vehicle production giant Tesla fell for the first time in almost four years during a disastrous first quarter that saw the Texas-based automaker fall short of performance estimates from Wall Street. With competition in the electric vehicle space heating up by the day despite slowing demand for EVs, Tesla’s Q1 sales figures show that its price cuts are steadily losing their intended effect.
Data revealed that the company delivered around 386,810 electric vehicles from the start of the year until March 31, 2024, a drop of 20.2% compared to the previous quarter. The automaker also produced 433,371 electric cars in Q1 2024, slightly more than 20,000 less than the 454,200 EVs Wall Street projected Tesla would produce through the first three months of 2024.
Tesla began cutting prices in China, Europe and the United States, the top electric vehicle markets on the globe, in 2023 due to stiff competition from Chinese carmakers. Billions of dollars in subsidies from Beijing have allowed carmakers in China to sell battery electric cars at much lower price points compared to Tesla and other Western carmakers, pressuring Tesla to lower its prices as well.
Waning consumer demand for electric vehicles, partly due to their high prices, rising inflation and soaring interest rates also contributed to Tesla’s decision to cut prices across most major markets. However, Q1 sales numbers underscored the declining effectiveness of this cost-cutting strategy and indicated that Tesla will have to shift gears to boost its sales.
The company has already seen an almost 30% decline in value through the first three months of 2024, and its shares were trading at 5.7% less last week. Its total vehicle deliveries are down by 8.5% compared to 2023, making this the first time Tesla sales dropped since the automaker was forced to temporarily halt production in the wake of the coronavirus pandemic.
According to Tesla, the fall in sales numbers is partly due to the carmaker’s efforts to prepare its Fremont, California, factory to ramp up production of the updated Tesla Model 3. Shutdowns at Tesla’s Berlin production plant due to a suspected arson attack early last month and shipping issues caused by the ongoing Red Sea conflict are also to blame for the fall in sales numbers, Tesla says.
Rising competition from Chinese companies such as BYD is also responsible for the drop in Tesla deliveries, with BYD even surpassing Tesla as the top EV producer on the globe in the last quarter of 2023. Fortunately for Tesla, BYD delivered only 300,000 electric cars in Q1 2024 compared to Tesla’s 386,810 deliveries. This included 369,783 Model Ys and Model 3s as well as 17,000 units of other Tesla EVs such as the Cybertruck, Model X premium SUV and the Model S Sedan.
If industry leaders such as Tesla are seeing drops in their quarterly deliveries, other startups including NIO Inc. (NYSE: NIO) have their work cut out for them if they plan on sustaining or even growing their current market share in the EV market.
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