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Tesla posted its first year-over-year drop in sales since the first year of the pandemic, as increased electric vehicle competition from Chinese and Western automakers ate into demand.
The company reported it built 433,000 vehicles but delivered only 387,000. That’s not only down from 484,507 cars it delivered in the final three months of 2023 but also down from the sales of 422,875 vehicles in the first quarter of last year.
Tesla has responded to the increase in competition by cutting prices. But while it is more profitable than traditional automakers, the cuts in pricing have been squeezing those profit margins that helped support the stock. The expectation of future sales growth was another factor that had been supporting its lofty stock price, which made it the world’s most valuable automaker.
Shares of Tesla, which had already lost nearly 0% of their value so far this year through Monday’s close, were down another 6% in early trading on the report.
Tesla attributed the decline in volumes partially to the production ramp-up of the updated version of Model 3 at its Fremont factory and to factory shutdowns resulting from shipping diversions caused by ships from China to Europe being diverted away from the Red Sea due to attacks there, as well as a week long closure of its German factory due to an arson attack there.
But the company has seen increased competition in the EV space. In the fourth quarter it lost the title of the world’s best-selling maker of EVs to Chinese automaker BYD. And it is facing new competition from legacy automakers, most of which are introducing new EV models as they move forward with plans to shift from traditional internal combustion engine vehicles to electrics.
This is a developing story. It will be updated.
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