Tesla (NASDAQ:TSLA), the electric vehicle giant known for its rapid growth and status as the world’s most valuable automaker, is anticipated to report a deceleration in first-quarter deliveries next week.
This slowdown comes as the initial surge from its aggressive price cuts starts to fade, and the company encounters stiff competition in a decelerating EV market.
Despite achieving significant sales growth in recent years, Tesla is preparing for a challenging 2024.
The automaker's strategy of delaying updates to its aging vehicle lineup, combined with the impact of high interest rates deterring consumer spending on expensive purchases, is proving detrimental.
Moreover, Tesla faces increased pressure from Chinese competitors who are introducing more affordable models in the world’s largest auto market.
Morgan Stanley analyst Adam Jonas highlighted concerns over Tesla's strategy, suggesting that the company might be experiencing "price-cut fatigue" among consumers, which could test Tesla's profitability thresholds to potentially unsustainable levels.
Jonas also pointed out that the current conditions might not improve in the near term, given the dated nature of Tesla's product lineup.
Tesla's stock has suffered as a result, plunging nearly 28% this year and becoming the S&P 500's most significant loser.
Analysts, on average, predict that Tesla will deliver 458,500 vehicles in the quarter ending March 31, a slight improvement over the same quarter last year but a drop of more than 5% from the previous three months.