Sales of American electric car manufacturer Tesla decreased by almost nine percent to 386,810 cars in the first quarter of this year from roughly 423,000 cars a year ago. It thus showed the first year-on-year decline in almost four years and significantly fell short of analysts’ expectations. Shares of billionaire Elon Musk’s company fell nearly five percent to $166.63 a piece on Tuesday. In addition, bitter news reached Tesla at a time when the rival Chinese company Xiaomi announced that over 100,000 people had ordered its first electric car.
Wedbush Securities analyst Dan Ives called Tesla’s latest results “an absolute disaster that the company will have a hard time explaining to investors.” The automaker said problems caused by traffic disruptions in the Red Sea and sabotage that curtailed production at its German factory contributed to the drop in sales in the first quarter. Analysts polled by FactSet predicted that Tesla would deliver 457,000 cars to customers in the first quarter, AP added.
Tesla, headed by one of the world’s richest people, Elon Musk, has recently been struggling with fierce competition and slowing growth in demand for electric cars. The automaker last reported a year-on-year drop in sales in the second quarter of 2020, when it had to limit production due to the covid-19 pandemic.
Analyst Gene Munster of Deepwater Asset Management said this year’s first quarter was “ugly” for Tesla. According to him, high interest rates and a decline in enthusiasm for electric cars had a negative impact on sales. Nevertheless, Munster expressed optimism about the company’s long-term prospects. “I still believe that Tesla is on the right track and that this storm will pass,” wrote X on the social network.
According to surveys and expert opinions, according to Reuters, some of Tesla’s potential customers in the United States are also put off by Musk’s leaning towards right-wing politics and some of his controversial public statements.
Tesla’s factory near Berlin had to stop production for about a week last month due to a power outage due to a fire on a power pole. The radical left group Vulkangruppe later claimed responsibility for the sabotage in the letter.
New competition in China
In China, which is the largest car market in the world, Tesla faces stiff competition from domestic carmakers such as BYD. In the fourth quarter of last year, it replaced Tesla as the largest seller of cars with a purely electric drive in the world.
In addition, Tesla recently gained a new rival in the Chinese market in the form of smartphone manufacturer Xiaomi. He also started producing electric vehicles and announced this Wednesday that he has already received more than 100,000 orders for his first electric car. Now, the sports car named SU7 is starting to be delivered to customers.
“A big company like Tesla will certainly be born in China,” said Lei Jun, CEO and founder of Xiaomi. Shares of the Chinese company added up to 16 percent on Tuesday. The company was thus valued at $55 billion on the stock market, surpassing the value of traditional American car companies General Motors with $52 billion and Ford with $53 billion.
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