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- Tesla delivered around 63,000 vehicles between January and March, a 31% decrease from the prior quarter, though it was a 110% increase from the first quarter of 2018. Tesla’s delivery number was 1,000 vehicles below what analysts surveyed by Bloomberg expected.
- But underperformance in a single quarter is not a reason for panic, said David Whiston, an automotive analyst at Morningstar.
- Tesla‘s first-quarter sales do have some long-term significance, as they indicate the Model 3 will be the key to Tesla’s sales performance until its Model Y SUV is released near the end of 2020, said Karl Brauer, the executive publisher for Kelley Blue Book.
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Tesla announced its first-quarter delivery and production numbers on Wednesday.
The electric-car maker delivered 63,000 vehicles between January and March, a 31% decrease from the prior quarter, though it was a 110% increase from the first quarter of 2018. Tesla’s delivery number was 1,000 vehicles below what analysts surveyed by Bloomberg expected. Tesla’s stock price fell nearly 9% Thursday morning.
But underperformance in a single quarter is not a reason for panic, said David Whiston, an automotive analyst at Morningstar.
“I know people get obsessed about these quarterly numbers. I don’t think they should,” he told Business Insider. “Any one quarter in isolation doesn’t mean a whole lot. You’ve got to look at longer-term trends.”
Tesla’s disappointing delivery numbers are not a reason to panic
While demand for the Model S sedan and Model X SUV appears to be falling, the number of vehicles that were in transit to customers at the end of the quarter – around 10,600 – does not suggest an immediate demand problem.
“I’m just not seeing anything indicating the [Model 3 sedan] demand is falling flat,” Whiston said. “The key will be: How does the Model 3 do in the rest of the year? If it doesn’t grow … then there is a big problem, but I’m not anticipating that to happen this year.”
Tesla has only one vehicle assembly plant – in Fremont, California – which means it can’t meet global demand the same way an established automaker with multiple factories around the world, like Ford or Toyota, can. As Tesla builds factories outside of the United States, it won’t have to choose which countries to prioritize for deliveries in a given quarter, Whiston said.
Tesla is building a factory in Shanghai that it says will begin production by the end of this year.
But last quarter illustrates big challenges Tesla will face
Tesla’s first-quarter deliveries do have some long-term significance, as they indicate the Model 3 will be the key to Tesla’s sales performance until its Model Y SUV is released near the end of 2020, said Karl Brauer, the executive publisher for Kelley Blue Book.
Combined sales for the Model S and Model X decreased by around 56% during the first quarter, which indicates that they’re falling to the margins of Tesla’s sales mix. It’s normal for vehicles as old as the Model S (released in 2012) and Model X (released in 2015) to experience a fall in demand, but if Tesla still hopes to hit its sales guidance for the year, the Model 3 will have to carry most of the load, Brauer said.
“I think it’s clear that the Model S and the Model X are going to be just fringe players in their total sales, and that the Model 3 has to deliver,” Brauer said. “They’re going to have to make sure they can match the price of the Model 3 to what people are willing to pay for it.”
Going forward, increased competition will raise the level of difficulty Tesla faces, said Jeremy Acevedo, a manager of industry analysis for Edmunds. While Tesla has shown that there’s an enthusiastic customer base for electric vehicles, the electric-vehicle market is still small, and Tesla doesn’t have the luxury of leaning on the popular, gas-powered trucks and SUVs its competitors are using to drive profits in the near-term, Acevedo said.
“Tesla’s facing an increasingly competitive environment, and some of the chips are stacked against them. It’s going to become more challenging for the brand going forward,” he said.
“It’s not going to get any easier from here.”
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- Tesla says it delivered about 63,000 vehicles in the first quarter of 2019, a 31% drop from Q4 2018