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Tesla sales fall way short of estimates in first drop since 2020

Tesla Inc. faced a setback in its sales figures, marking its first decline in year-over-year sales since the onset of the COVID-19 pandemic. According to a statement released by the company on Tuesday, Tesla delivered 386,810 vehicles in the initial three months of 2024, a figure significantly below analysts’ expectations of 449,080 deliveries. The news triggered a 7 per cent drop in the company's stock during early New York trading sessions.

Leading up to the close of the first quarter, Wall Street had been steadily revising downward its projections for Tesla's deliveries. Some analysts accurately anticipated that the numbers would fall short of the 422,875 vehicles delivered in the corresponding period last year. Several factors contributed to this shortfall, including temporary shutdowns at Tesla's Berlin plant and the retooling of its California factory to accommodate an upgraded version of the Model 3, a process that typically slows down production.

However, the primary concern lies in consumer demand. Elevated interest rates have deterred some potential buyers, and Tesla itself has cautioned investors about being in a transitional phase between two growth cycles. In an attempt to stimulate demand, CEO Elon Musk offered a $1,000 incentive in February, noting that purchasing enthusiasm tends to wane during the winter months. Furthermore, Tesla has recently delved into advertising and intensified efforts to educate consumers about its product lineup.

While Tesla does not provide a breakdown of quarterly vehicle sales by region, it's widely known that the United States and China constitute its largest markets. The company manufactures the Model S, X, 3, and Y in Fremont, California, along with the Model 3 and Y in Shanghai. Additionally, production facilities in Austin and outside Berlin contribute to the manufacturing of the Model Y. Notably, the Model Y SUV and Model 3 sedan accounted for 96 per cent of deliveries in the fourth quarter.

In late 2023, Tesla introduced the Cybertruck in the United States, a stainless steel-clad electric pickup truck. However, the company did not disclose specific figures regarding the production and delivery of Cybertrucks.

Despite these challenges, Tesla managed to reclaim its status as the world's largest electric vehicle (EV) seller, a position it lost to China's BYD Co. towards the end of the previous year. BYD reported global sales of 300,114 battery-electric vehicles in the first quarter of 2024, while its total sales, including hybrids and other new-energy automobiles, amounted to 626,263 units during the same period.

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