Tesla Has Wall Street Worried About How Many Cars it Just Sold

A Tesla factory in Germany. Some on Wall Street are braced for Tesla’s first sales decline since the early days of the pandemic. PHOTO BY SEBASTIAN GOLLNOW/DPA VIA AP

Tesla Inc. may be headed for a gloomy milestone as waning demand for electric vehicles and elevated interest rates take a toll on sales.

Analysts rapidly lowered their projections for this week’s deliveries report as the quarter came to a close. Some on Wall Street are even braced for Tesla’s first sales decline since the early days of the pandemic.

On average, analysts surveyed by Bloomberg estimate that Tesla delivered 453,964 vehicles in the quarter. That would be down more than six per cent from the company’s record showing in the fourth quarter, which tends to be the best time of year for sales. The key will be delivering more cars than the 422,875 managed in the first three months of 2023 and avoiding a first year-over-year drop since the second quarter of 2020.

Elon Musk may not have helped matters in the final week of March. The chief executive imposed a new directive that he acknowledged would slow the sales process, requiring that every customer in North America be taken for short drives to test out the driver-assistance feature Tesla misleadingly markets as “Full Self-Driving.”

Tesla started offering a free one-month trial of the feature, which otherwise costs US$199 a month as a subscription or US$12,000 to purchase. This was one of several perks the company dangled to entice consumers, along with temporary US$1,000 discounts and free supercharging. Tesla also stepped-up advertising on Google and X, the social media service Musk owns.

Musk warned investors in January that the company is “between two major growth waves.” The first was fuelled by the Model 3 sedan and Model Y sport utility vehicle, and the next is expected from the launch of a cheaper next-generation vehicle slated to start production late next year.

With that next-gen car a ways off, some analysts fear that Tesla’s outlook for a “notably lower” growth rate this year may actually manifest in no growth at all in the first quarter.

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Emmanuel Rosner of Deutsche Bank AG cut his deliveries estimate twice in the matter of a bit more than two weeks last month. He now expects the company sold around 414,000 cars in the quarter, down about two per cent from a year ago.

“We think worries over volume and earnings could further dampen investor sentiment and put significant pressure on the stock,” he said in a March 28 report.

Tesla shares have already slumped 29 per cent this year, the worst showing on the S&P 500 index.

The company suffered several setbacks in the quarter, including multiple shutdowns of its plant outside Berlin. It also changed over its factory in California to make an upgraded version of the Model 3, which tends to slow output.

In China, Tesla is struggling to keep pace with BYD Co. Ltd., which became the world’s top-selling EV maker at the end of last year. The U.S. carmaker instructed employees at its Shanghai facility last month to lower production by working five days a week instead of the usual 6.5 days, people familiar with the matter told Bloomberg News.

The Model 3 and Model Y accounted for 96 per cent of Tesla’s global deliveries last year. The company also makes the Model S sedan and Model X SUV and started selling the Cybertruck late last year, though it has yet to break out sales for that vehicle.

— With assistance from Esha Dey and Craig Trudell.

Bloomberg.com