- Tesla’s difficult first quarter could portend more problems to come.
- Simply lowering prices may not be enough to attract new electric vehicle buyers.
- Analysts are starting to worry about serious demand problems.
Tesla, the leader in electric vehicles, is finally starting to feel the effects of the slowdown in electric vehicle sales that is already shaking the rest of the sector.
Elon Musk’s automaker posted its weakest quarterly deliveries since 2022, recording its first year-over-year quarterly decline since 2020 and the biggest miss ever against analyst expectations.
This difficult quarter is the first sign that the electric vehicle leader is not immune to a slowdown in electric vehicle sales that has hit its competitors since the second half of 2023.
So far, Tesla has largely managed to keep up with the changing demographics of electric vehicle buyers by flexing its large profit margins to lower prices.
But even its inexpensive Model 3 and Model Y saw deliveries fall 10% from the same period last year and 20% from the previous quarter.
Is Tesla ready for the next wave of electric vehicle buyers?
For new electric car buyers in the market, a simple price drop may not be enough to convince them.
A recent study from the Boston Consulting Group found that next-wave EV buyers are placing more importance on vehicle running costs and purchasing from more established legacy brands.
Many of these buyers are turning to hybrids, which Tesla doesn’t sell. BCG predicts that the segments with the highest hybrid demand will be mainstream and premium sedans, coupes and crossovers – squarely in the segment where Tesla is strongest.
BCG also found that only one vehicle currently meets consumer expectations in terms of price, range and charging time: Hyundai’s Ioniq 6. The 3″ modelfollows closely,” BCG said.
Tesla attributed part of the first-quarter drop in deliveries to production slowdowns related to the ramp-up of its refreshed Model 3 and overseas factory closures.
Still, analysts are concerned that Tesla’s first-quarter report portends a tougher year ahead.
“Beyond the known production bottleneck, there could also be a serious demand problem,” Deutsche Bank’s Emmanuel Rosner wrote in a note to clients on Tuesday.
They will have the opportunity to ask Elon himself during an earnings conference call scheduled for April 23.
businessinsider
