Tesla may face ‘some darker days’ with disappointing 1Q sales, increased competition

Tesla reported this week that it produced 412,376 of its Model 3 and Model Y vehicles in the first quarter of 2024, and it delivered 369,783 of them. This was the first drop in sales since 2020, when the pandemic drove down all car sales.

The company attributed the decline in volumes, in part, to the ramping up of its updated Model 3, factory shutdowns caused by the Red Sea conflict and an arson attack at a factory in Berlin.

Dan Ives, managing director and equity analyst of Wedbush Securities, said in a note to investors, that the company’s performance in the quarter is a “seminal moment” for CEO Elon Musk to either turn the company around or face “some darker days” ahead.

"Let's call this as it is: While we were anticipating a bad 1Q, this was an unmitigated disaster 1Q that is hard to explain away," Ives wrote.

Electric vehicles manufacturers haven’t had much good news lately. While the Biden administration finalizes mandates requiring manufacturers to produce more electric vehicles, the public isn’t buying them at the same pace as manufacturers are building them.

Tesla was way ahead of the EV game, launching its Roadster in 2008, which gave it years to corner the market. However, increasing competition is starting to eat into the company’s volumes. The Cybertruck, which could have attracted new customers to the company, appears to have only lowered the company in the eyes of existing fans.

An entrepreneur Thomas Remo, who runs the YouTube channel “Gear Down,” posted a video Saturday of him taking possession of a new $82,000 Cybertruck from a Tesla dealership in Irvine, California. As Remo pulls out of the dealership, he gets a warning on the digital dashboard.

“Oh, we already broke it,” Remo jokes in the video, as the warning sound continues and the screen in the Cybertruck flashes red. Remo flips through some screens trying to figure out what the problem is as the car comes to a stop.

“Elon, what are you doing, bro?” he says to a passenger holding a camera.

Eventually, Remo is able to get the vehicle to operate properly, but the clip appears to highlight the distance between what Tesla promised for its newest line and what was actually delivered.

The truck didn’t float, didn’t sell for under $40,000, had an unimpressive range, and the $3,000 base camp design wasn’t quite what customers had hoped they were paying for.

This left the company with little to offer that was fresh and new. Aaron Turpen, an automotive journalist who has test driven and written about many models of EVs, told Just The News that’s important to an automotive company’s success.

“They don’t seem to renew any product. The Model S has been around for a decade, and it hasn’t changed. Not really,” Turpen said.

When there’s little competition, a company can coast on a model for years, Turpen said. As an example, he pointed to the Nissan Frontier. For over a decade, it was a high seller because the only other midsize pickup truck was the Toyota Tacoma. Both vehicles saw few major changes year-to-year.

“Nissan was literally printing money every time they made that truck. It was just profit,” Turpen said.

Then General Motors came in with the Canyon, and Chevrolet introduced the Colorado. At that point, the new models of the Frontier and Tacoma began to change.

Tesla sold its cars on the idea they would be timeless, Turpen said. Now that it’s up against increasingly formidable opponents, it’s going to have to innovate.

“As long as they have the largest corner of the market, they can ride for quite a while. But eventually they're going to have to do something,” he also said.

That something could have been the Cybertruck.

At the New York Auto Show last week, the “World Car Awards” didn’t even mention the Cybertruck, while China’s BYD company took first-place spots in two categories, including “World Car of the Year.” The awards aren’t just for electric cars, where you might expect a Chinese electric car to do well.

“That's a little bit of a coup, because BYD is a really new manufacturer when it comes to cars. The fact the Cybertruck wasn’t even on the list is also saying something,” Turpen said.

He also said that the company would have done better to have dropped CEO Elon Musk five or six years ago, leaving him to focus on Space X, and the social media platform X. While it would have hit the company’s stock, Turpen believes it would have normalized and been better for the long term.

“I really think that the company as a whole would be much stronger if they had a more dedicated and more traditional CEO,” Turpen said.