Elon Musk’s Terrible Quarter: Tesla’s Dismal Q1 Performance Demonstrates Weakness in EV Market

Connecticut Tesla still burning (Stamford Fire Department)

According to third-party data, Tesla’s deliveries declined by around five percent in its two largest markets — the U.S. and China — in the first few months of 2024 compared to a year ago. While sales in Europe were up 41 percent year-over-year for January and February, the pace has slowed from the end of 2023.

The disappointing sales can be attributed to a combination of factors, including softening demand for EVs despite aggressive price cuts and enhanced U.S. subsidies, as well as production hiccups related to a Model 3 line update in Fremont and an arson attack at the Berlin factory. Demand for EVs has weakened significantly despite Joe Biden’s insistence that electric vehicles are the future of the car industry.

Consensus analyst estimates for Tesla’s Q1 deliveries have fallen in recent weeks but remain significantly higher than what the data suggests. The FactSet consensus stands at 457,000, while more attentive analysts on both the bull and bear sides have trimmed their forecasts to the 406,000-414,000 range based on the latest available information.

The delivery shortfall implies that earnings estimates for Tesla are also too high. This spells further trouble for Tesla because the company’s margins have shrunk due to repeated price cuts around the globe.