Tesla Inc. has reported a significant decline in vehicle sales, with a 13% drop in the first quarter of 2023, marking its worst performance since 2022. The company moved 336,681 vehicles worldwide during this time frame. This concerning red flag suggests that Tesla is having a difficult time finding new buyers in an incredibly difficult market context. The EV carmaker was the darling of Wall Street, basking in record sales numbers. Yet the new results indicate a disturbing enough trend to suggest a reversal.
The decline in Tesla’s sales comes despite the company implementing deep discounts, zero financing options, and other incentives to entice potential buyers. Overall these are not enough efforts to overcome the larger forces working against the brand. Tesla’s stock has plunged by approximately 50% since reaching a record high in mid-December, further complicating the company’s financial outlook.
Analysts point to a number of reasons for this recent bust. Matt Britzman, Equity Research analyst, noted that it is rare to see public opinions of a company as directly linked to a polarizing White House. Until Musk reestablishes his priorities, shares will remain turbulent,” he said. This political backlash has even, according to reports, inspired acts of vandalism against Tesla cars nationwide.
What’s more, Tesla’s sales performance has been hurt by downtime at its plants. The automaker just released the first production units of a facelifted Model Y—the company’s best selling vehicle. Britzman elaborated on some of what was at play. He pointed out that factory downtime has hit deliveries hard, particularly with Tesla launching the much-expected refreshed version of the Model Y.
The electric vehicle market is getting very competitive, very fast. BYD is not resting on its laurels, though, having increased its game by improving offerings and deploying cutting-edge tech that lets its cars charge up in only a few minutes. This development would certainly pull future consumers from Tesla as they look for more convenient charging options.
…yet, the electric vehicle sales landscape has been overall very sluggish. This contrast is unfair, to be sure, it adds yet another headwind for Tesla as it’s walking this regulatory gauntlet. Investors are bracing for an earnings surprise when Q1 earnings come in late this month. Unfortunately, this report might make their disappointment even worse.
Britzman shared where Tesla stands in the broader market. He went on to frankly say, “There’s no way to sugarcoat it, Tesla’s first-quarter delivery numbers are worse than expected, though a lot of investors have been bracing for a soft number.” He added that the scale is even worse than a lot of people were anticipating. This makes it all the more urgent that Tesla get better at addressing these complaints.