Delivery Risk For Tesla Due To Soft Demand And Slowdown In China

(CTN News) – In a sluggish electric-vehicle market, Tesla will likely report sluggish first-quarter deliveries as the boost from price cuts wanes and competition for buyers increases.

Tesla, the most valuable automaker in the world, is bracing for a slowdown in sales in 2024 after years of rapid growth.

While high interest rates have sapped consumer appetite for big-ticket items, competitors like Xiaomi in China, the world’s largest auto market, are rolling out cheap models, the company has been slow to refresh its aging models.

Tesla may be experiencing price-cut fatigue with consumers and may be testing profitability levels it may not like, Morgan Stanley analyst Adam Jonas said earlier this month.

Due to aging product line-up, conditions may not significantly improve in the near term.” stock has dropped nearly 30% so far this year, making it the worst performer in the S&P 500.

A Visible Alpha poll of 17 analysts predicts Tesla will deliver 458,500 cars in the first quarter of 2019.

Those units are higher than the 422,875 it delivered in the same quarter last year, but they represent a decrease of more than 5%.

The Tesla CEO has cut prices aggressively at the expense of margins since late 2022, which has helped boost sales, but frustrated many customers whose cars have lost value.

A cold winter and high borrowing costs are reducing demand, Musk said, so factory prices must be cut.

Tesla has been cutting prices in the US, China, and Germany and boosting incentives and discounts to boost demand this year. In a report this week,

HSBC said Teslas had the dubious honor of being the fastest-depreciating vehicles in the country.

It may work for consumables, but we are less sure if it will work for consumer durables, where residuals are important. This year’s sales growth for next-generation electric vehicles will be “notably lower,” Tesla warned in January.

Musk’s comments that Tesla would offer a free trial of its Full Self-Driving driver assistant system to US customers on Wednesday prompted shares to fall 1.7% on Thursday.

China has become a tough market for automakers due to a protracted price war, and lost the title of top EV maker in the fourth quarter to BYD, which has been leading the deep price cuts.

Tesla delivered 131,812 vehicles manufactured in China in the first two months of this year, down 6.2% from last year.

As a result of Chinese battery material import restrictions, Tesla’s Model 3 compact sedans do not qualify for a $7,500 federal tax credit this year.

In the US, hybrid vehicles have also become more popular than gas-powered cars, as they are more fuel-efficient and offer greater driving range than battery-powered electric vehicles.

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