Tesla sales drop in the first quarter, miss Model 3 estimates

Tesla reported a drop-off in deliveries in the first quarter after US incentives for its vehicles shrank and the company struggled to quickly get Model 3 sedans to overseas consumers.

The electric-car maker delivered 63,000 vehicles in the three months that ended in March, according to a statement Wednesday, down from 90,966 in the fourth quarter. The 50,900 Model 3 sedans Tesla delivered in the first quarter missed analysts’ average estimate for 51,750 and was lower than the totals in each of the two previous quarters.

Tesla released the figures after the late trading session Wednesday in New York. The shares have slumped 12 per cent this year amid demand concerns, multiple price cuts, job reductions and a continued exodus of senior executives. Chief executive officer Elon Musk capped the quarter with a tweet referring to the work his delivery teams had done as the “most insane logistics challenge” he’d ever seen. Tesla had a total of 10,600 vehicles in transit at the end of last month as the company started sales of the Model 3 in China and Europe. That’s fewer vehicles than were still making their way to customers at the end of the third quarter.

Shipping cars to customers outside the US was critical toward helping make up slack in demand after the federal tax credit Tesla customers were eligible for was cut in half as of January 1. While this pulled some demand forward into the fourth quarter, the company said orders still outpaced the number of vehicles it was able to deliver in the first three months of this year.

The company had warned shareholders that first-quarter deliveries of the pricier Model S sedan and Model X sport utility probably would be lower than a year ago because customers rushed to buy in time for the full US$7,500 incentive.

Several Wall Street analysts cut their delivery estimates as the quarter came to an end, citing likely pullback in the US after the full tax credit expired and delays getting Model 3 cars delivered to overseas customers. Musk also cautioned on Tesla’s January 30 earnings call that seasonality would come into play in the first quarter, with auto sales tending to be lowest in January and February and picking up in March.

Tesla’s debut of a long-promised US$35,000 version of the Model 3 during the quarter was overshadowed by announcements of significant cost cuts Musk said were necessary for the company to be able to offer the car at that price point.