Electric-vehicle leader Tesla is experiencing a slowdown in EV sales, marking its lowest quarterly deliveries since 2022. This decline represents the company's first year-over-year quarterly drop since 2020 and its largest miss compared to analyst expectations. The recent quarter reveals that Tesla is not immune to the industry-wide slowdown in electric vehicle sales that has affected its competitors since the latter half of 2023.
Tesla has traditionally adjusted to the evolving demographic of electric vehicle shoppers by leveraging its profit margins to lower prices. However, even its more affordable models, the Model 3 and Model Y, witnessed a 10% decrease in deliveries compared to the same period last year and a 20% drop from the previous quarter. This decline suggests that simply reducing prices may not be sufficient to attract the newest wave of electric car buyers.
A study by Boston Consulting Group indicates that the next generation of EV buyers prioritize factors such as vehicle running costs and purchasing from well-established legacy brands. Many of these consumers are turning to hybrids, a segment in which Tesla does not currently operate. The study forecasts high demand for hybrids in mass-market and premium sedans, coupes, and crossovers, areas where Tesla holds a strong position.
According to BCG, only one vehicle currently aligns with consumer preferences in terms of price, range, and charging time: Hyundai's Ioniq 6, with Tesla's Model 3 closely following. Tesla attributes part of the Q1 delivery decline to production slowdowns related to the rollout of its updated Model 3 and overseas factory closures.
Analysts express concerns about Tesla's performance in Q1, with some suggesting a potential demand issue beyond production bottlenecks. The company's upcoming earnings conference call on April 23 will provide an opportunity for stakeholders to seek clarification from Elon Musk himself.
