Tesla's quarterly deliveries declined for the first time in nearly four years and fell short of Wall Street analysts' estimates amid a challenging competitive landscape in the EV market and questions regarding the company's direction.
The Elon Musk-led automaker's stock declined by 4.9% during Tuesday's trading session and slid a further 0.28% in after hours trading, with the stock down nearly 33% on the year. That followed Tesla's announcement that it delivered roughly 387,000 vehicles in the first quarter – well below expectations of about 443,000 and an 8.5% decrease compared to the first quarter of last year.
"Let's call this as it is: While we were anticipating a bad 1Q, this was an unmitigated disaster 1Q that is hard to explain away," Dan Ives, managing director and equity analyst of Wedbush Securities, wrote in a note to investors.
TESLA STOCK SLIDES ON BIG DELIVERIES SHORTFALL
He added that the firm remains "bullish on the long term story given the prospects for growth" but described the delivery figures as a "train wreck into a brick wall quarter" for Tesla.
Tesla faced an escalating price war in China, a key market for the EV maker, as low-cost competitors like BYD forced it to reduce prices and cut into its margins.
High interest rates in the U.S., a byproduct of the Federal Reserve's fight against inflation, have also made it more expensive for American car buyers – a dynamic Tesla has sought to counteract with temporary discounts to entice customers.
TESLA HAS NEW COMPETITION WITH A CHINESE EV PRICED LOWER THAN MODEL 3
The company also experienced production issues at its Gigafactory near Berlin, Germany. It announced a nearly two-week production pause at the facility in late January and early February due to a parts shortage caused by the shipping crisis in the Red Sea precipitated by Iran-backed Houthi militants. The facility also was forced to pause production for nearly a week in March due to an arson attack by an environmental activist against an electricity transmission facility that helped power the plant.
Having faced a variety of headwinds in the latest quarter, Ives said Musk needs to right the ship to regain investors' confidence in his leadership of the world's most valuable automaker.
"For Musk, this is a fork in the road time to get Tesla through this turbulent period, otherwise troubling days could be ahead. With the ongoing debacle around margins, production and ongoing macro events, Musk will need to quickly take the reins back in to regain confidence in the eyes of the Street with a big few quarters ahead."
TESLA CEO ELON MUSK VISITS GIGA BERLIN AS PRODUCTION RESUMES FOLLOWING ARSON ATTACK
Ross Gerber, CEO of Gerber Kawasaki, said in an appearance on FOX Business' "The Claman Countdown" that Tesla's dismal quarter should increase scrutiny of Tesla's board of directors and their oversight of CEO Elon Musk.
"How many mistakes can a board make? You've got the pay package issue in Delaware – we know it's not an independent board, even though they've disclosed in documents that they are independent when it's not actually true," Gerber said.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Host Liz Claman noted the competitive challenges in China and the production issues in Germany and Gerber said that while some of those factors shouldn't be discounted, he added that Tesla vehicles "are the best vehicles on the road from a quality, performance perspective by a large margin and they're really cool vehicles."
Reuters contributed to this report.
