Tesla Had a Brutal First Quarter! It Could Get Even Worse
Tesla, led by Elon Musk, is bracing for a challenging quarter following a series of setbacks, signalling a tumultuous period for the electric vehicle giant.
Analysts anticipate that Tesla will fall short of Wall Street’s projections for both deliveries and revenue in the wake of global EV demand slowing down and disappointing performance in key markets like China. The company is expected to deliver around 457,000 units, with analysts revising down their forecasts in light of recent difficulties.
In China, Tesla is grappling with fierce competition from local rivals like BYD and newcomers such as Xiaomi. Reports indicate a reduction in Model Y and Model 3 production, with February deliveries plummeting by 19% compared to the previous year. This decline in sales has contributed to Tesla’s lowest monthly report since December 2022.
Similarly, Tesla’s performance in the U.S. market has been lacklustre, with estimated deliveries for January and February down from the previous year. To stimulate sales, Tesla has resorted to price adjustments, initially slashing prices before announcing an impending raise in April to instil a sense of urgency among buyers.
Elon Musk, Tesla’s CEO, recently announced a requirement for employees to install and demonstrate the company’s Full Self-Driving (FSD) system to customers before finalizing deliveries in North America. This move is seen as part of a series of efforts aimed at boosting deliveries and revenues, according to analysts.
However, production challenges persist, exacerbated by updates to the Model 3 production line in Fremont, California, and disruptions like the recent arson attack near Tesla’s Giga Berlin-Brandenburg facility in Germany, which incurred substantial losses.
Analysts, including longtime Tesla supporter Dan Ives, have revised their price targets downward, with Ives describing the current situation as a “nightmare” and warning of potentially darker days ahead if Tesla fails to navigate through this turbulent period successfully.
Amidst these challenges, Tesla’s stock has declined nearly 30% this year, causing it to drop out of the top 10 U.S. companies by market capitalization, trailing behind other industry giants. In what was once a high-flying stock, Tesla now faces significant headwinds as it works to overcome its current obstacles.
