April 19, 2024

Tesla’s “nightmare” of a first quarter will likely be followed by even more disappointment, capping months of struggles for Elon Musk’s electric vehicle maker.

The Austin, Texas-based company is largely expected to miss Wall Street’s expectations for both deliveries and revenue after three months marked by the slowed global demand for EVs and a poor performance in China. On average, analysts expect deliveries of 457,000 units.

Deutsche Bank’s Emmanuel Rosner—who rates Tesla stock as a “buy”— trimmed his delivery forecast from 427,000 units to 414,000 units and cut full-year expectations from 2.06 million units to 1.9 million units. Morgan Stanley’s Adam Jonas on Wednesday lowered his delivery estimate from 469,000 units to 425,000 units. Earlier this month, Jonas said Tesla could lose money this year.

Tesla “is a growth company with no growth,” Wells Fargo analyst Colin Langan wrote in a note to investors on March 13, downgrading the stock to the equivalent of a sell rating.

In China, where Tesla is facing off against strong local rivals like BYD and newcomers like Xiaomi, Tesla has started telling workers to lower Model Y and Model 3 production. Tesla’s deliveries in February fell 19% compared to last year, a drastic decline from sales in prior months and the company’s lowest monthly report since December 2022. Insurance data tracked by CnEVPost shows a 5% year-over-year decline in China over the past 12 weeks.

Meanwhile, in the U.S., Tesla delivered just 108,000 vehicles across January and February, according to Motor Intelligence’s estimates. That’s down from 114,000 during the same period in 2023.

Tesla has repeatedly adjusted prices in the U.S. to boost sales, slashing prices in February to make its EVs more attractive, before saying it will raise them in April to create a sense of urgency.

Earlier this week, Musk said Tesla would require employees to install and show customers how to use his company’s Full Self-Driving (FSD) driver assistance system before finalizing a delivery in North America. The company has run similar promotions to drive up sales in the past. Tesla has also promised to update FSD every two weeks.

“The mandate to demonstrate FSD as it is today, is just the latest in a long-running series of end-of-quarter stunts by Musk intended to boost deliveries and revenues,” Guidehouse Insights analyst Sam Abuelsamid told Reuters.

Production has also been tempered because of an update to the Model 3 production line at Tesla’s flagship factory in Fremont, California. An arson attack near Tesla’s Giga Berlin-Brandenburg in Germany shut down the facility for almost a week and cost the company about $1 billion.

Wedbush analyst Dan Ives, a longtime Tesla bull, cut his Tesla price target from $315 per share to $300 per share and called the situation a “nightmare.” He added that the “Tesla narrative is as negative as we have seen in the last few years.”

“For Musk this is a fork in the road time to get Tesla through this turbulent period otherwise darker days could be ahead,” Ives said.

Tesla stock has sunk almost 30% so far this year. As a result, Tesla is no longer one of the top 10 U.S. companies by market capitalization, trailing behind Visa, JPMorgan Chase, and weight-loss drug maker Novo Nordvisk.

For long stretches of the first quarter, it was the worst-performing stock in the S&P 500.

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