'Unmitigated disaster' for Elon Musk's Tesla as sales slump

By John Mercury April 5, 2024

Tesla has reported a sharp fall in worldwide sales amid increased competition and slowing demand for electric vehicles.

The carmaker said it delivered 386,810 vehicles during the first quarter of the year – down nearly 9% on the 423,000 it shipped from January to March last year.

It marks the first year-on-year quarterly sales decline for the company in nearly four years.

Tesla said the fall was “partly” due to disruption to shipping in the Red Sea region and an arson attack at its gigafactory in Berlin.

It also blamed the phasing in of an updated version of its Model 3 sedan at its factory in Fremont, California.

Tesla’s chief executive Elon Musk noted that rival electric carmaker BYD had also experienced a slump in sales.

He wrote on X: “This was a tough quarter for everyone.”

However, some commentators blamed the controversy surrounding Mr Musk, along with increased competition from rivals and declining “excitement” about electric vehicles generally.

Wall Street tech analyst Dan Ives described the results as “an unmitigated disaster that is hard to explain away”.

He said: “This was a train wreck into a brick wall quarter for Musk and co.”

Mr Ives also warned Mr Musk needed to turn around the company’s fortunes. “Otherwise, some darker days could clearly be ahead that could disrupt the long-term Tesla narrative,” he added.

FILE PHOTO: Model Y cars are pictured during the opening ceremony of the new Tesla Gigafactory for electric cars in Gruenheide, Germany, March 22, 2022. Patrick Pleul/Pool via REUTERS/File Photo
The Model Y is one of Tesla’s most popular cars. Pic: Reuters

It comes just days after market intelligence firm Caliber claimed Mr Musk’s right-wing political views and controversial public statements on X were putting off some customers from buying a Tesla.

“It’s very likely that Musk himself is contributing to the reputational downfall,” Caliber chief executive Shahar Silbershatz said.

Tesla did not respond to requests for comment about the claims.

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The company’s own reputation has also taken a battering in recent years following product recalls, lawsuits and safety concerns.

However, as Mr Musk pointed out, Chinese rival BYD also reported a slump in sales. It sold just over 300,100 vehicles in the first three months of the year, a 43% decline from the previous record quarter when it overtook Tesla.

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Despite regaining the crown as the world’s biggest seller of electric vehicles, Tesla’s figures were below Wall Street estimates and caused its shares on the Nasdaq to fall almost 5% by the close on Tuesday.

Nearly 96% of the vehicles sold by Tesla in the first quarter were Model 3s and Ys. Other vehicles recently launched by the company include its “futuristic” Cybertruck, which has divided opinion among car lovers.

Tesla will post its full financial results for the first quarter on 23 April.


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