American multinational automotive and clean energy company Tesla, has reported worse-than-expected first-quarter earnings.
Tesla delivered about 387,000 vehicles over the first three months of the year, falling short of analysts expectation of 457,000.
This marked a 9% decline compared to 423,000 deliveries recorded in Q1 2023, which happens to be the first worse-than-expected Q1 earnings since 2020. Shares of Tesla fell more than 5% in morning trading on Thursday.
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Following the unpleasant first-quarter deliveries, Tesla is back to slashing the prices of its vehicles in a bid to boost sales. The EV giant reduced the Model Y vehicle prices in Australia by up to more than 9% on Thursday, bringing the base price down to around $42,240.
This is coming after the Australian EV market was hit with a new monthly high in March, with more than 10,000 vehicle sales. To maintain sales momentum in 2023 and 2024, Tesla has aggressively cut vehicle prices and offered discounts. The company has continued to have large discounts on inventory Model Y vehicles in the U.S. and other markets.
Meanwhile, despite the price cuts, Tesla increased its U.S prices for all Model Y trims on April 1. The company raised prices on Europe Model Y vehicles on March 22. In China, it also increased prices in its Model Y.
Wall Street analyst working for Guggenheim Ronald Jewsikow commenting on Tesla poor first-quarter earnings report, said the company is currently dealing with concerns from multiple angles, pointing out the challenges in China as a major area of concern.
In his words,
“It was a messy first quarter. The demand is slowing, China competition is strong, and then Europe hasn’t grown for five quarters now for Tesla. Structurally, there’s emerging risks in all three regions that, even as we move beyond a very messy first quarter earnings result, there are reasons for concern”.
It is worth noting that several developments in China have negatively impacted the revenue of the automaker this year. Tesla announced steep price cuts in the Asian country in early January amid stiff competition, but it has so far failed to see a sales boost. Deliveries in the country fell almost 20% year over year, Tesla reported in February.
“Now there’s much more competition directly with the Model 3 in China. Both from Huawei sold as many as Tesla did in the first quarter at very similar prices and you referenced the Xiaomi car, the vehicle that just launched in China and I think that’s a serious competitive threat to the Model 3”, Jewsikow added.
With the first-quarter deliveries now out of the way, Tesla is expected to see a significant increase in its revenue in the second quarter, due to increased Model 3 and Cybertruck sales in the U.S.