Tesla's stock slumps as delivery numbers miss the mark by a wide margin

By Emily Bary and Claudia Assis

Tesla delivered far fewer vehicles than expected in the first quarter; a 'serious demand issue'

Tesla Inc. shares tumbled more than 5% Tuesday after the EV maker posted delivery figures that fell well short of Wall Street's already dimmed expectations.

Tesla (TSLA) delivered 386,783 electric vehicles in the first quarter, it said in a morning release. That compares with expectations of 457,000 EVs, according to FactSet, and deliveries of 423,000 EVs in the first quarter of 2023.

"Decline in volumes was partially due to the early phase of the production ramp of the updated Model 3 at our Fremont factory and factory shutdowns resulting from shipping diversions caused by the Red Sea conflict and an arson attack at Gigafactory Berlin," Tesla said in its release.

Model 3 and Model Y units combined accounted for 369,783 of Tesla's deliveries in the latest quarter.

Tesla also disclosed production of 433,371 units in the first quarter.

The discrepancy between deliveries and production implies about 46,000 EVs in inventory, "which confirms that beyond the known production bottleneck, there may also be a serious demand issue," Emmanuel Rosner at Deutsche Bank said in a note. "In our view, the production figure was predictably soft, but the miss was in deliveries, likely largely due to demand issues in the U.S."

"The key question on investor minds is how much of the miss" is related to what Tesla said in the announcement, and also to increased demand late last year as some Model 3 customers raced to take advantage of expiring tax credits, and how much is related to underlying market or Tesla-specific trends, Tom Narayan with RBC Securities said.

"The EV slowdown underway in the U.S. is likely a factor," and Tesla's Model 3 and Model Y are also "somewhat saturated products," he said. Tesla's recent offer of one month of free Full Self Driving, its suite of advanced driver assistance features for city driving, might be a catalyst for the second quarter, the analyst said.

"Worst case it brings folks into the show room and best case, it increases the FSD attach rate and possibly increases 3/Y deliveries," Narayan said.

"The China situation is another open question. [January and February] were very soft months for the market but that is seasonally normal," the analyst said.

Related: Nio's stock touches 52-week low after Chinese EV maker cuts sales estimates

Earlier Tuesday, investors also got a sense of how the company has performed in China.

Data from the China Passenger Car Association indicated that the electric-vehicle maker sold 89,064 China-made cars in that country during the month of March, according to Dow Jones Newswires. That was up 0.2% from a year before.

Though Tesla's sales there were roughly flat from a year earlier, overall EV sales in China rose 33%.

BYD Co. Ltd. (HK:1211) was by far the biggest seller in China for the month, with sales upwards of 300,000 units, according to Dow Jones Market Data. That marked a 46% rise from a year prior.

See also: Nio, BYD see big jumps in March EV deliveries as Tesla's numbers loom

Tesla has been facing stiff competition in China, and analysts have been cautious lately.

Tesla shares are down 34% so far this year and 20% in the past 12 months, which contrasts with gains of 9% and 26% for the S&P 500 index SPX in the same period.

-Emily Bary -Claudia Assis

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04-02-24 1105ET

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