Tesla’s First Quarter Deliveries Tumble As Musk Struggles To Expand Into China
Tesla’s first-quarter deliveries stumble as CEO Elon Musk works to expand the new Model 3 vehicle into China and Europe.
The automaker delivered roughly 63,000 vehicles in the latest period, which is about 31 percent drop from the previous three months. Analysts predicted deliveries would drop to 73,500, according to FactSet, a number reflecting deliveries for the Model 3 and other vehicles in Tesla’s stable.
Last quarter was Tesla’s first sales period after the phaseout of the lucrative federal tax credit — buyers now get $3,750 from $7,500 per vehicle. The credit was halved in January, which phases out after an automaker sells more than 200,000 electric vehicles.
Tesla attributed the slowdown to challenges associated with taking the Model 3 to China for the first time. Only half of the entire quarter’s vehicles were delivered 10 days before the period ended, according to Tesla. The company delivered 50,900 Model 3 cars in the first quarter, down 20 percent from 63,359 the last three months, according to Tesla. Analysts had expected 54,600 in the latest quarter.
Analysts believe the hiccups are likely a result of a lack of foresight at the company. Tesla’s explanation for the declines blamed on Europe and China “speaks to the lack of planning and foresight that remains at the company,” Joseph Spak, an analyst for RBC Capital Markets, said in a note Thursday.
Tesla began constructing a factory in China to build the Model 3 and future Model Y compact-SUV for that market, and CEO Elon Musk has told reporters that he intends on building an assembly plant in Europe. Musk is still fighting with federal regulators as they seek to hold him accountable for exaggerating sales numbers on Twitter.
The Securities and Exchange Commission (SEC) asked a judge in February to hold Musk in contempt for violating the terms of an agreement requiring the company to pre-approve his tweets.
Regulators claimed he violated the agreement when he tweeted Tesla would make around 500,000 cars in 2019. Musk later corrected the tweet, saying that he “meant to say” weekly production would equal to half-a-million cars annually while total car deliveries would be roughly 400,000.
Musk agreed to resolve an SEC probe in October 2018 without admitting or denying wrongdoing. The plan called for their combined $40 million in penalties to be distributed to affected shareholders. He told his Twitter followers in August of that year that he secured “funding” to take the company private at $420 per share, far more than the company was worth at the time of the tweet.