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Tesla Records High Deliveries but Misses Estimates

Tesla Inc reported record-high deliveries for the first quarter but fell short of analyst estimates due to increased competition and a challenging economic outlook. The electric vehicle (EV) manufacturer attempted to boost demand with price cuts.

Tesla logo
Tesla logo

Quarterly Deliveries Achieve Record, Analyst Expectations Unmet

The company delivered 422,875 vehicles, a new record for Tesla, yet below the anticipated 430,008 vehicles, according to Refinitiv data. Investors have been watching CEO Elon Musk's strategy of cutting prices to stimulate sales, although concerns about decreasing margins persist.

Tesla's Deliveries Show Growth, But Challenges Remain

Tesla's deliveries increased by 4% from the previous quarter and were 36% higher than in the same period last year. While the company delivered 6% more of its primary Model 3/Model Y vehicles, the number of deliveries for the pricier Model X/Model S vehicles plunged by 38%.

Production Outpaces Deliveries in Q1 2023

Tesla produced more vehicles than it delivered, manufacturing 440,808 vehicles during the first three months of 2023. The automaker increased production at new factories in Texas and Berlin, and China's production recovered from a COVID-19 lockdown hit.

Global Price Cuts Ignite EV Market Competition

In January, Tesla reduced prices globally by up to 20%, sparking a price war after missing Wall Street's delivery estimates for 2022. The price cuts in China led to a battle with rivals like BYD and Xpeng, who lowered their prices to protect market share amidst weakening demand.

BYD Dominates Market Share, Tesla Lags Behind

BYD accounted for 41% of new energy car sales in the world's largest auto market during the first two months of the year, while Tesla held an 8% share. Musk cautioned that recession risks and rising interest rates might force the EV manufacturer to reduce prices to maintain growth, potentially sacrificing profit.

Analysts Predict Further Price Pressure for Tesla

Some analysts believe Tesla may face pressure to lower prices further as multiple automakers have matched their cuts and concerns about a weakening economy continue. Additionally, the demand outlook is still being determined due to potential reductions in U.S. electric vehicle subsidies starting on April 18.

Tesla Shares Experience Volatility Amid Price War

Tesla's stock has surged more than 68% this year, fueled by expectations that the company would emerge victorious in the price war it initiated. However, shares remain over 50% below their November 2021 peak and have fallen since Tesla's investor day on March 1, when Musk revealed little about plans for an affordable, mass-market EV.