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A Tesla Model X at a store in Shanghai.
new york
CNN
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Tesla's annual sales fell for the first time since the first year of the pandemic, as increased competition for electric vehicles from Chinese and Western automakers eroded demand.
CEO Elon Musk's electric vehicle company reported that it had manufactured 433,000 vehicles but delivered only 387,000. This is down from the 484,507 units delivered in the last three months of 2023, and down from the 422,875 units sold in the first quarter of last year.
Tesla responded to increased competition by cutting prices. Tesla is more profitable than traditional automakers, but the profit margins that helped push up the stock price are being squeezed by lower prices. Investor expectations that the company would grow sales in the future also supported Tesla's high stock price, which has made it the world's most valuable automaker.
Tesla shares fell 5% on Monday, having lost more than a third of their value so far this year.
Tesla said part of the decline in production was due to increased production of the latest version of the Model 3 at its Fremont factory and factory closures due to attacks in the Red Sea diverting ships bound for Europe from China from the Red Sea. I thought this was caused by. He also noted that an arson incident led to the closure of a German factory for a week.
However, intensifying competition in the EV field is a major factor in the decline in demand. In the fourth quarter, Tesla lost its title as the world's best-selling EV maker to Chinese automaker BYD.
However, despite plummeting sales, Tesla regained the global title from BYD, which saw sales of pure battery-powered cars fall even more sharply than at the end of last year. According to BYD's report, EV sales in the first quarter stood at 300,114 units excluding hybrids, down from 525,409 units in the final quarter of 2024.
But unlike Tesla, BYD's EV sales increased 13% compared to the same period last year, when sales of battery-powered vehicles remained at 264,647 units.
Tesla also faces new competition from traditional automakers in the West, most of which are moving ahead with plans to transition from traditional internal combustion engine cars to electric vehicles and introducing new EV models.
Toyota has not yet released global sales figures for the first quarter, but it reported that pure EV sales rose 61% in the first two months of this year to just 14,504 units.
General Motors on Tuesday reported that U.S. EV sales fell 22% year over year in the quarter due to the company's decision to discontinue production of the current model of the Chevrolet Volt, the country's best-selling EV. But so are EV versions of other new EV models, the Cadillac Lyric, the GMC Hummer SUV and pickup, and the Chevrolet Blazer and Silverado. Combined, sales increased 841%, a silver lining in a disappointing quarter for GM overall.
Wedbush Securities analyst Dan Ives is bullish on Tesla stock, with analysts predicting sales of as much as 440,000 cars to as low as 414,000. said. While he remains bullish on the long term, he called this quarter a “train wreck to a brick wall quarter.”
Ives said the biggest issue is likely Tesla's sales in China, which he estimates are down 3% from a year ago. He said Chinese demand “will be very moderate going into 2024.”
“We expected a poor first quarter, but this was an unmitigated disaster that is difficult to explain,” he said in a note to clients. “We see this as a seminal moment in the Tesla story for Mr. Musk to turn this situation around and reverse the first quarter results. It is clear that dark days are coming that could disrupt the story of the world.”
While overall demand for EVs is still growing rapidly (US EV sales rose 40% last year, topping 1 million for the first time), the pace of growth is slower than some expected. In response, some traditional automakers, including General Motors and Ford, have withdrawn plans to produce EVs.
This story has been updated with additional reporting and context.
