Tesla, led by Elon Musk, experienced a substantial decline in deliveries during the first quarter of the year, attributing the slump to various challenges. The company handed over nearly 387,000 electric vehicles to customers, marking its lowest quarterly figure in over a year, down more than 8% from the previous year and falling short of analysts’ expectations, causing a more than 4% drop in shares.
Analysts, such as Dan Ives from Wedbush Securities, described the situation as an “unmitigated disaster,” emphasizing the difficulty in explaining the downturn. Tesla’s struggles were compounded by global shipping disruptions, a fire at its European factory, and weakening demand in key markets like China, where competitors like BYD gained traction.
Supply chain disruptions, including Houthi attacks in the Red Sea, exacerbated Tesla’s challenges, leading to temporary factory closures in Germany. This prompted Ives to describe the first quarter as a “train wreck into a brick wall,” increasing pressure on Musk to navigate the company through turbulent times.
Production in the first quarter decreased by about 1.6% year-on-year, while deliveries were significantly impacted, dropping over 8%. Notably, this marked the first annual decline in deliveries since 2020. Concerns over Tesla’s driverless car software, safety issues, and product fatigue compounded its challenges, while Musk’s focus on ventures like X, formerly Twitter, drew criticism, affecting the Tesla brand. Despite industry-wide warnings of weaker demand for electric vehicles, forecasts still anticipate significant growth in electric vehicle sales, suggesting that Tesla’s setbacks are not indicative of the broader trend.
