Tesla faced a sharp decline in sales last quarter, delivering 386,810 vehicles compared to 423,000 during the same period the previous year. The company attributed this drop to factors such as phasing in a new Model 3 version at its Fremont plant, disruptions from shipping in the Red Sea, and an arson attack that affected its German factory's power supply. Despite previously lowering prices significantly, including a temporary discount on the Model Y, these actions impacted Tesla's profit margins and worried investors.
Analysts, including Wedbush Securities' Dan Ives, described Tesla's performance in the last quarter as a significant setback, noting that it was the first time since 2020 that the company reported a decline in vehicle deliveries. Tesla had anticipated slower sales growth for the year, mentioning challenges related to global expansion and transitioning between different models. As competition in the electric vehicle market intensifies, with companies like Ford and General Motors investing in more affordable EV options, Tesla's market share has decreased from 80% of EV sales in the U.S. between 2018 and 2020 to 55% in 2023, according to Cox Automotive.
Tesla faced production challenges in various regions, with an arson attack impacting its German factory and upgrades affecting Model 3 production in the U.S. Despite a rise in sales for models like the X, S, and Cybertruck, deliveries of their top-selling Models 3 and Y decreased while the company ended up producing more vehicles than it sold during the first quarter. With concerns raised about margins, production delays, and competition, analysts emphasized the importance for Tesla and Elon Musk to navigate this turbulent period successfully to regain investor confidence.