Tesla Inc. encountered a substantial downturn in the initial quarter of 2024, witnessing its shares plummet by 29%, marking the most dismal quarter for the stock since the close of 2022 and its third worst since its initial public offering in 2010.
This descent also positioned Tesla as the largest loser in the S&P 500 during this period. The electric vehicle (EV) manufacturer is preparing for its first-quarter vehicle production and delivery report, with Wall Street analysts, including the bullish ones, foreseeing lackluster results despite the company’s endeavors to bolster sales through price reductions and incentives.
The average estimate from 11 analysts compiled by FactSet anticipates approximately 457,000 deliveries, representing an 8% increase from the previous year’s 422,875, yet still posing a point of concern given the broader context of Tesla’s performance and market challenges.
Market Forces and Competitive Terrain
Tesla’s recent challenges stem from several pivotal factors, with the intense competition in China emerging as a primary issue.
Notably, Chinese electric vehicle (EV) manufacturers, led by BYD, have heightened market competition, culminating in BYD surpassing Tesla as the world’s leading EV producer by the close of 2023 and maintaining this position through the initial quarter of 2024.
While Tesla’s performance in China has been lackluster, the company has responded by reducing prices and adjusting production schedules at its Shanghai facility.
Moreover, operational disruptions in Europe, stemming from assaults on shippers in the Red Sea and a significant protest at its German factory, have added complexity to Tesla’s global endeavors.
Product Lineup and Leadership Challenges
Tesla’s product lineup is exhibiting signs of aging, with the much-anticipated Cybertruck still in its nascent stages and not projected to exert significant influence on Tesla’s financials until potentially 2025.
The corporation is additionally engaged in revitalizing the Model 3 and developing a novel, more budget-friendly platform dubbed the “Model 2,” although these endeavors do not provide immediate solutions to its present hurdles.
Moreover, CEO Elon Musk’s contentious public declarations and political involvements have sparked apprehension among investors and customers, possibly distancing a portion of Tesla’s conventional consumer demographic.
Financial Performance and Outlook
Tesla’s earnings in the fourth quarter showed a modest uptick of 1% in automotive revenue compared to the prior year, while broad revenue expanded by 3%.
The company signaled the possibility of reduced vehicle volume growth in 2024 as it gears up for the debut of its “next-generation vehicle” in Texas.
Against the backdrop of Elon Musk’s pursuit of heightened voting control and the persistent legal and operational hurdles, Tesla’s future appears multifaceted.
