Tesla reported lower-than-expected car deliveries in the first quarter of 2024, marking one of the company's first year-over-year sales declines in nearly four years. The electric vehicle (EV) manufacturer delivered approximately 386,800 cars during this period, falling short of Wall Street estimates that averaged around 477,000, as reported by UBS. This represents a 20.1% decrease from the previous quarter and an 8.4% drop compared to the same period last year.
The broader EV industry has faced challenges, and Tesla has not been immune to economic pressures. Over the past year, Tesla has significantly reduced car prices to drive sales, impacting its profitability in the process.
While Tesla has announced plans to increase prices in the U.S. and China starting in April, analysts caution that this move may be aimed at boosting sales in the short term rather than indicating strong demand. The company's future profit growth hinges on the success of a new, undisclosed vehicle at a lower price point and the sustained popularity of its Cybertruck model.
Additionally, Tesla has intensified efforts to promote its Full Self-Driving software to customers upon car delivery. The optional $12,000 add-on (or $199 per month) serves as a key revenue stream for the company. CEO Elon Musk has previously underscored the significance of Tesla's autonomous driving technology, suggesting that the company could potentially sell cars at breakeven prices while reaping substantial benefits from autonomous capabilities in the future.
However, Tesla faces regulatory scrutiny, with safety authorities mandating a large-scale recall in March 2023. The company's ability to navigate these regulatory challenges while advancing its autonomous driving technology will be critical for its long-term success.
