Tesla blames production setbacks for the Decline in Quarterly Deliveries, but falling demand is the bigger issue.

Tesla reported its first year-over-year decline in quarterly deliveries since 2020, badly missing Wall Street’s expectations and stoking further concern about the company’s growth prospects this year.

Elon Musk’s electric-vehicle maker delivered 386,810 vehicles globally in the first three months of 2024, down 8.5% from a year earlier. It was the company’s lowest quarterly performance since the third quarter of 2022.

First, the company halted output at its plant in Germany for two weeks beginning in late January, citing parts shortages stemming from attacks on ships in the Red Sea. Then, in March, the assembly line ground to a halt once more after an arson attack on the grid that supplies power to the factory.

Meanwhile, Model 3 production tumbled in the U.S. as the company introduced its refreshed version of the car domestically.

Tesla produced 433,371 vehicles in the first quarter, down from 440,808 in the first three months of 2023. Most of them were Model Y crossovers and Model 3 cars. The company didn’t disclose how many Cybertruck pickups it produced.

The gap between production and deliveries suggests “that beyond the known production bottleneck, there may also be a serious demand issue,” Deutsche Bank analyst Emmanuel Rosner wrote in a note to investors.

The company’s first-quarter performance calls into question whether it will be able to achieve even modest growth in 2024, Rosner added.

After years of chasing 50% annual growth on average, the highflying carmaker has warned of “notably lower” growth in 2024, and Chinese rivals  are nipping at its heels.

Tesla’s Auto Growth Heydays Are Over

I side with Rosner. Tesla’s heydays of surging demand growth for Teslas is over. Competition is increasing and relative demand growth, if not absolute demand growth, is falling.

If Tesla can scale up semi production that would be a big boost. But Elon Musk has been promising 50,000 semis a year, every year for four years and has delivered a grand total of 100.

Tesla has a drought of new products and competition is catching up everywhere. It’s autonomous driving features are an outright joke. More importantly, they are a huge safety risk.

Tesla far lags Waymo on autonomous driving features and safety.

Every year since 2017 or so, Musk has said he would deliver fully autonomous driving in two years. Waymo is close. Tesla is not even in the ballpark due to flawed design.

Tesla Recalls Nearly All Vehicles on US Roads

In December, Reuters reported Tesla Recalls Nearly All Vehicles on US Roads Over Lack of Autopilot Safeguards.

Tesla, is recalling over 2 million vehicles in the U.S. to install new safeguards in its Autopilot advanced driver-assistance system, after a federal safety regulator cited safety concerns.

The largest-ever Tesla recall appears to cover nearly all vehicles on U.S. roads to better ensure drivers pay attention when using the system. Tesla’s recall filing said that Autopilot’s software system controls “may not be sufficient to prevent driver misuse” and could increase the risk of a crash.

Hardware and Musk’s Mouth

The recall is a software issue. However, hardware and Elon Musk’s mouth are much bigger issues.

Musk keeps hyping fully autonomous driving when Tesla is not even close. Then Musk blames “driver error” when drivers attempt to drive as Musk claims.

Tesla Semis Hype vs Reality

Elon Musk said he would be producing 50,000 EV semis a year. That was in 2017.

As of December 21, 2023, the Tesla Semi Fleet Has Almost 100 Trucks

Tesla delivered the first Semi trucks in December 2022, but little has been said about the Class-8 truck or its dedicated production line at Giga Nevada in the past year.

Now, Tesla’s VP of Engineering Lars Moravy reveals that Tesla has tripled its Semi fleet, with volume production planned for 2024.

It took Tesla 5 years to produce a single truck. And we are now up to a grand total of 100, almost.

Only 35 Class 8 Truck EV Charging Stations

One of the things holding up use of electric semis is expense. A second is the number of charging stations.

Let’s discuss some of the obvious flaws in Biden’s latest mandates that will require EVs to account for 60% of new urban delivery trucks and 25% of long-haul tractor sales by 2032.

Image from the US Department of Energy, annotations in blue by Mish.

Please note there are 4 Million Semis on the Road, Only 35 Class 8 Truck EV Charging Stations

And Electrek says Tesla’s giga factory is only about 30% complete and Tesla hasn’t expanded the facility for years.

After years, there is finally some movement at the giga factory. Electrek thinks it may be work on a parking lot.

For the 5th year, Musk is hyping 50,000 electric semis without having a factory to produce them. And now Tesla auto sales are falling.

TSLA Monthly Chart

(Click on image to enlarge)

Image courtesy of Stcockcharts.com, annotations by Mish

Fundamentally, Tesla is dramatically overpriced. Technically, a descending triangle is a bearish formation.

It’s a long way down to a reasonable valuation.

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