Tesla shares experienced a decline on Tuesday following the company's announcement that it fell short of first-quarter delivery estimates. The electric car manufacturer reported sales of just under 387,000 vehicles during the first quarter, marking a 20% decrease from the previous quarter and an 8.5% drop from the same period last year. This decline represents Tesla's first year-over-year sales decrease since the onset of the COVID-19 pandemic in early 2020.
The final delivery count of 387,000 vehicles missed Wall Street's expectations, which had anticipated 457,000 deliveries based on an average of forecasts from 11 analysts provided by FactSet. The disappointing figures were described as 'an unmitigated disaster' by Wedbush analyst Dan Ives, who suggested that this could be a pivotal moment in Tesla's trajectory, potentially leading to challenges that may disrupt the company's long-term narrative.
As a result of the missed estimates, Tesla shares were trading down 5.1% at $166.23 early Tuesday afternoon. The company attributed the decline in deliveries to challenges associated with the initial stages of a production ramp-up for the updated Model 3, as well as factory disruptions caused by the Red Sea conflict and an arson incident at a Berlin factory.
Consumer sentiment also played a role in the sales decline, with a recent survey by market intelligence firm Caliber indicating a shrinking interest among potential Tesla buyers in the U.S. This trend was partly attributed to CEO Elon Musk's controversial public persona, with concerns raised about his behavior on social media platform X, which he acquired in 2022 for $44 billion. Musk has faced criticism for sharing contentious posts, including one that was condemned by the White House for being antisemitic, although Musk has denied holding such views.
Furthermore, a slowdown in consumer demand for electric vehicles and increased competition in the EV market added to the headwinds faced by Tesla. Despite missing delivery estimates, Tesla managed to outsell BYD Co., a Chinese automaker, regaining its position as the world's largest EV seller, even as BYD also experienced a decline in sales during the first quarter.
