SAN FRANCISCO - Tesla may be headed for a gloomy milestone as waning demand for electric vehicles and elevated interest rates take a toll on sales.
Analysts rapidly lowered their projections for this week’s deliveries report as the quarter came to a close. Some on Wall Street are even bracing themselves for Tesla’s first sales decline since the early days of the pandemic.
On average, analysts surveyed by Bloomberg estimate that Tesla delivered 449,080 vehicles in the quarter. That would be down more than 7 per cent from the company’s record showing in the fourth quarter, which tends to be the best time of year for sales.
The key will be delivering more cars than the 422,875 managed in the first three months of 2023 and avoiding a first year-on-year drop since the second quarter of 2020.
Chief executive Elon Musk may not have helped matters in the final week of March. He imposed a new directive that he acknowledged would slow the sales process, requiring that every customer in North America be taken for short drives to test out the driver-assistance feature Tesla misleadingly markets as full self-driving.
Tesla started offering a free one-month trial of the feature, which otherwise costs US$199 (S$269) a month as a subscription or US$12,000 to purchase. This was one of several perks the company dangled to entice consumers, along with temporary US$1,000 discounts and free supercharging. Tesla also stepped up advertising on Google and X, the social media service Mr Musk owns.
Mr Musk warned investors in January that the company is “between two major growth waves”. The first was fuelled by the Model 3 sedan and Model Y sport utility vehicle (SUV), and the next is expected from the launch of a cheaper next-generation vehicle slated to start production in late 2025.
With that next-generation car far away in the distance, some analysts fear that Tesla’s outlook for a “notably lower” growth rate in 2024 may manifest in no growth at all in the first quarter.
Mr Emmanuel Rosner of Deutsche Bank cut his deliveries estimate twice in the matter of just over two weeks in March.
He now expects the company sold around 414,000 cars in the quarter, down about 2 per cent from a year ago. “We think worries over volume and earnings could further dampen investor sentiment and put significant pressure on the stock,” Mr Rosner wrote in a March 28 report.
Tesla shares have slumped 29 per cent already in 2024, the worst showing on the S&P 500 Index.
The company suffered several setbacks in the quarter, including multiple shutdowns of its plant outside Berlin.
It also changed over its factory in California to make an upgraded version of the Model 3, which tends to slow output.
In China, Tesla is struggling to keep pace with BYD, which became the world’s top-selling electric vehicle maker at the end of 2023. The US carmaker instructed employees at its Shanghai facility in March to lower production by working five days a week instead of the usual 6½ days, people familiar with the matter told Bloomberg News.
The Model 3 and Model Y accounted for 96 per cent of Tesla’s global deliveries in 2023.
The company also makes the Model S sedan and Model X SUV and started selling the Cybertruck in late 2023, though it has yet to break out sales for that vehicle. BLOOMBERG
