Tesla's tough quarter has investors anxious

Tesla's first-quarter delivery figures that are expected to be released next week are forecast to be relatively soft amid intensifying competition and lagging demand — a dynamic that has investors on edge ahead of the release.

The EV maker, led by Elon Musk, is bracing for a slowdown in 2024 after years of rapid sales growth, with analysts lowering their expectations for the company's first-quarter deliveries to account for a slowdown. Tesla delivered 422,875 vehicles in the first quarter of 2023 — a level that it may struggle to reach this quarter.

Wedbush Securities noted that delivery estimates have fallen from about 475,000 to 425,000 vehicles as a «perfect storm of demand issues hit» and hurt the company's sales figures. Those headwinds have caused Tesla's stock to struggle as a result, declining by 29.2% year to date through Friday.

«The biggest and most concerning issue for Tesla (and its investors) remains China as rising EV competition and a lingering price war has made this key market very challenging for Tesla the last year and especially the last quarter,» wrote Dan Ives, managing director and senior equity analyst Wedbush Securities, in a note to investors.

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Ives said the arrival of Tesla's delivery numbers «will not be a moment of celebration for the bulls and instead be a rip the band-aid quarter» for the company's investors.

He wrote that while Tesla is in a lull between periods of growth, investors are getting impatient, which is «being exacerbated» by Musk's discussion about developing artificial intelligence (AI) tools outside of Tesla, issues with the board, a Delaware court voiding Musk's compensation package and «now a likely move to incorporate in Texas.»

Ticker Security Last Change Change %TSLA TESLA INC. 175.79 -4.04 -2.25%

Ives explained that while there has been negativity about Tesla in the past, this time it is warranted due to sluggish growth and compressed margins amid the competition with low-cost Chinese EV makers like BYD.

Xiaomi, another Chinese EV rival, rolled out a new electric Sedan on Thursday that is expected to undercut the price of Tesla's Model 3 by