Tesla sales fell more than expected

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Tesla Model X at its store in Shanghai.

New York

Tesla posted its first annual sales drop since the first year of the pandemic as electric vehicle competition from Chinese and Western automakers increased.

CEO Elon Musk's electric car company built 433,000 vehicles but delivered only 387,000. That's down from 484,507 cars delivered in the final three months of 2023, and down from 422,875 vehicle sales in the first quarter of last year.

Tesla has responded to increased competition by lowering prices. Even though Tesla is more profitable than traditional automakers, the price cut has squeezed profit margins and helped boost the stock. Investors' expectations that the company will increase sales in the future also support Tesla's soaring stock price, making it the world's most valuable automaker.

Shares Tesla They fell 5% on Monday and have lost a third of their value this year.

Tesla attributed some of the decline to an increase in production of an updated version of the Model 3 at its Fremont factory and a factory shutdown as a result of ships from China to Europe being diverted from the Red Sea. Attacks there. This is a quote Week long closure One reason is its German factory Arson attack.

But increased competition in the EV space is a big factor in declining demand. In the fourth quarter, Tesla lost the title The world's best-selling producer of EVs For Chinese automaker BYD.

Even with a sharp drop in sales for Tesla, it reclaimed the global title from BYD, which saw an even bigger drop in sales of pure battery-powered vehicles compared to the end of last year. BYD said it sold only 300,114 EVs, including hybrids, in the first quarter, up from 525,409 sold in the final quarter of 2024.

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But unlike Tesla, BYD's EV sales were up 13% compared to the previous year when it sold only 264,647 battery-powered cars.

Tesla faces new competition from legacy automakers in the West, many of which are launching new EV models as they move forward with plans to transition from traditional internal combustion engine vehicles to electric vehicles.

Toyota has yet to report first-quarter global sales, but its pure EV sales rose 61% in the first two months of the year, albeit to just 14,504 vehicles.

General Motors said Tuesday that its U.S. EV sales fell 22% in the quarter from a year earlier due to its decision. Discontinue the current version of its best-selling US EV, Chevrolet Bolt. But its other new EV models — the Cadillac Lyric, GMC Hummer SUV and pickup, as well as EV versions of the Chevrolet Blazer and Silverado — It posted an 841% jump in sales, a bright spot in a disappointing quarter for GM overall.

Analysts expect sales of between 440,000 and 414,000 vehicles, said Wedbush Securities analyst Don Ives, who is bullish on Tesla shares. He called the quarter “a train wreck in a brick-wall quarter,” though he claims he's been fresher for a long time.

Ives said the biggest problem may be Tesla's sales in China, which he estimates are down 3% from a year ago. He described Chinese demand as “very soft coming out of the gates for 2024”.

“While we were anticipating a poor first quarter, this was an unmitigated disaster that is difficult to explain,” he said in a note to clients. “We see this as a critical moment in the Tesla story, and Musk needs to turn this around and reverse the black-eyed first-quarter performance. Otherwise, there are clearly some dark days ahead that will disrupt the long-term Tesla story.”

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While overall demand for EVs is still growing rapidly – ​​US EV sales jumped 40% last year, topping 1 million vehicles for the first time. The growth rate is slow than some predicted. This has prompted some traditional automakers such as General Motors and Ford to scale back their EV production plans.

This story has been updated with additional reporting and context.

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