Electric vehicle maker Tesla is facing a sales slowdown in the first quarter of 2024 amid increased competition in the EV market and a decrease in the boost from price cuts. Analysts predict Tesla will deliver 458,500 vehicles in the quarter, up from the previous year but representing a 5% decline from the preceding quarter.
CEO Elon Musk has been aggressively cutting prices on popular models to stimulate sales in a high-interest rate environment. Musk has attributed the demand slowdown to winter conditions and high borrowing costs.
Tesla's manufacturing facilities need continuous production for efficiency, but consumer demand is seasonal, creating a challenge for the company. The company temporarily reduced prices for certain models in February, leading to frustration among customers whose vehicles have depreciated in value.
Despite warnings of lower sales growth in 2024, Tesla is focusing on its next-generation EV, codenamed "Redwood." The company also faces the loss of federal tax credits on its Model 3 sedans due to non-compliance with eligibility restrictions.
Competition from Chinese automakers like BYD, which overtook Tesla as the top-selling EV maker in the fourth quarter of last year, is also impacting Tesla's bottom line. In the first two months of this year, Tesla's deliveries in China decreased by 6.2% compared to the previous year.
Tesla's stock has declined over 28% year-to-date and over 6% in the last year. The company's future sales performance will depend on its ability to navigate these challenges and maintain its position in the competitive EV market.