Tesla Faces Major Test in Increasingly Competitive EV Market

By: Keith Wagstaff · April 08, 2024 · Reading Time: 3 minutes

Tesla Hits a Roadblock

Last week, Tesla (TSLA) announced it delivered 387,000 vehicles across the globe in the first quarter of 2024. That’s significantly less than the 450,000 vehicles analysts expected and down 8.5% from the same period last year. After the report was released on Tuesday, Tesla’s stock plummeted by around 5%.

Tesla blamed a variety of production setbacks, including a blackout at its Gigafactory in Berlin last month due to arson. But the fact that Tesla produced far more cars than it sold suggests it could instead be a demand problem. Consumers have been increasingly wary of electric vehicles, with reasons including availability of charging points and range concerns.

Rivals Rev Their Engines

Tesla still rules the EV market. Its Model Y and Model 3, respectively, topped Kelley Blue Book’s list of the best-selling electric vehicles of 2023.

But rival carmakers are making up ground. Last week, Hyundai announced its best first quarter ever, with EV sales skyrocketing by 100% in March. In 2023, BMW sold 75% more EVs than it did the previous year. And Chinese EV manufacturer BYD’s first-quarter sales were up 13.4% from a year ago.

Looking Ahead

For Tesla, a lot is riding on what press reports have dubbed the Model 2 — a lower-priced car with potentially broader appeal. Industry analysts estimate a price tag of around $25,000, though Tesla CEO Elon Musk hasn’t confirmed that number. While Musk has said the model should be in production by the second half of 2025, Reuters reported late last week that the company had scrapped the plans for the lower-cost model.

In the meantime, Tesla is hoping to bolster its bottom line by convincing consumers to pay $12,000 upfront or $199 a month for its Full Self-Driving package. Last month, the company began offering consumers a free month-long trial of the technology.

Another new development for Tesla: spending money on advertising. Musk’s anti-ad stance has softened in recent months, with the company significantly boosting how much it spends on video advertisements on YouTube, Facebook, Instagram, and Musk’s own X (formerly known as Twitter).

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