NEW YORK: Tesla posted its first annual drop in sales since the first year of the pandemic, as increased electric vehicle competition from Chinese and Western automakers ate into demand.
CEO Elon Musk’s electric car company reported it built 433,000 vehicles but delivered only 387,000. That’s down from the 484,507 cars it delivered in the final three months of 2023, and it’s also down from the 422,875 vehicle sales in the first quarter of last year, says CNN.
Tesla has responded to increased competition by cutting prices. Although Tesla is more profitable than traditional automakers, the price cuts have been squeezing the profit margins that helped boost the stock. Investors’ expectations that the company would grow sales in the future had also been supporting Tesla’s lofty stock price, which made it the world’s most valuable automaker, CNN report added.
Shares of Tesla fell 5% Monday and have lost more than a third of their value this year.
Tesla attributed the decline in volumes partially to the production ramp-up of the updated version of Model 3 at its Fremont factory and to factory shutdowns resulting from ships from China to Europe being diverted away from the Red Sea due to attacks there. It also cited a week long closure of its German factory due to an arson attack.
But the increased competition in the EV space is a big factor in the decline in demand. In the fourth quarter, Tesla lost the title of the world’s best-selling maker of EVs to Chinese automaker BYD, CNN said.