Tesla's weak first-quarter deliveries an 'unmitigated disaster' for Musk

Tesla's quarterly deliveries declined for the first time in nearly four years and fell short of Wall Street analysts' estimates amid a challenging competitive landscape in the EV market and questions regarding the company's direction.

The Elon Musk-led automaker's stock declined by 4.9% during Tuesday's trading session and slid a further 0.28% in after hours trading, with the stock down nearly 33% on the year. That followed Tesla's announcement that it delivered roughly 387,000 vehicles in the first quarter – well below expectations of about 443,000 and an 8.5% decrease compared to the first quarter of last year.

«Let's call this as it is: While we were anticipating a bad 1Q, this was an unmitigated disaster 1Q that is hard to explain away,» Dan Ives, managing director and equity analyst of Wedbush Securities, wrote in a note to investors.

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He added that the firm remains «bullish on the long term story given the prospects for growth» but described the delivery figures as a «train wreck into a brick wall quarter» for Tesla.

Ticker Security Last Change Change %TSLA TESLA INC. 166.63 -8.59 -4.90%

Tesla faced an escalating price war in China, a key market for the EV maker, as low-cost competitors like BYD forced it to reduce prices and cut into its margins.

High interest rates in the U.S., a byproduct of the Federal Reserve's fight against inflation, have also made it more expensive for American car buyers – a dynamic Tesla has sought to counteract with temporary discounts to entice customers.

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The company also experienced production issues at its Gigafactory near Berlin, Germany. It announced a nearly two-week production pause at the facility in late January and early February due to a parts shortage caused by the shipping crisis in the Red Sea precipitated by Iran-backed Houthi militants. The facility also was forced to pause production for nearly a week in March due to an arson attack by an environmental activist against an electricity transmission facility that helped power the plant.

Having faced a variety of headwinds in the latest quarter, Ives