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Tesla had on of its worst quarters, delivery wise, in Q1 of 2024. Experts and analysts believe that 2024 may be a rough year for Tesla market in terms of growth

Tesla, EV giant led by Elon Musk, is staring at possibly one of its worst years, after a prolonged period of setting the global EV stage on fire.

Tesla has experienced a major slide in shipments during the first quarter of this year, marking its lowest quarterly delivery figures since 2022. To put things in context, in 2022, Tesla, along with the rest of the world was still reeling from the effects of the pandemic, was facing a massive silicon chip shortage, and was undergoing major downtimes in global supply chains.

Tesla’s fall in deliveries this year can be attributed to a series of challenges. This includes a fire at its European factory earlier this year, as well as major global shipping disruptions because of conflict surrounding Israel, Palestine and Yemen.

The first quarter of 2024 saw Tesla deliver just under 387,000 EVs to its customers, a decrease of more than 8 per cent compared to the same period last year and well below what analysts and Tesla themselves had expected. As a result of falling short of its sales projections, Tesla’s stock plummeted more than 4 per cent following the announcement.

Analysts are calling this an “unmitigated disaster” for Tesla, especially when we consider the EV-maker’s ongoing challenges.

Things have been made worse by higher interest rates impacting affordability in both, the US and China, two of Tesla’s biggest markets. Making matters worse, Tesla is facing an unprecedented level of competition from rivals. While some are expanding their electric vehicle offerings, others, like Xiaomi are roaring into the market and grabbing both, eyeballs as well as market share.

Despite repeated price cuts by Tesla in response to weakening demand, competitors like BYD have made significant gains, particularly in key markets such as China.

The situation was further compounded by supply disruptions caused by Houthi attacks in the Red Sea, which temporarily halted production at Tesla’s factory in Germany, subsequently affected by an alleged arson attack.

While Tesla reported a modest 1.6 per cent year-on-year decline in production during the first quarter, deliveries were significantly impacted, dropping over 8 per cent compared to the same period last year. This marks the first annual delivery decrease for any quarter since 2020, with deliveries down 20 per cent compared to the final quarter of 2023.

The decline in Tesla’s shipments comes amid a broader trend of car companies revising their strategies due to weaker-than-expected demand, although industry forecasts still anticipate significant growth in electric vehicle sales this year. Additionally, Tesla faces some company-specific challenges, including increased scrutiny over its autonomous driving software, and safety concerns regarding power steering and other components.

All of this has investors worried about Tesla’s product lineup. The fact that Elon Musk’s focus, has been diverted to several other ventures, including X, has further dampened investor sentiment around Tesla’s brand.

As Tesla navigates through these challenges, the company finds itself at a critical juncture, with the need for strategic decisions to mitigate potential future obstacles.

(With inputs from agencies)

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