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Tesla, the absolute leader in the global electric vehicle industry, suffered a "Waterloo" in the first quarter of this year, with deliveries nearly 14% lower than analysts' expectations and a 9% year-on-year decline, triggering a sharp drop in stock prices. Tesla's share price has fallen 33.62% year-to-date.
Looking at the U.S. market as a whole, electric vehicle sales grew by just 2.7 percent, less than a fraction of the 47 percent increase in the same period last year, and the share of electric vehicles in new car sales fell from 8.1 percent to 7.1 percent.
In this context, Reuters suddenly broke the news that Tesla wants to cancel the production of the long-awaited entry-level model Model 2, and instead focus on the development of robotaxi, a self-driving taxi. Musk denied the report on Twitter, but immediately announced the announcement time of the Roborobotis.
According to the analysis, Tesla's entry-level model can no longer compete with China's cheap electric vehicles, so autonomous driving is a story that can better support Tesla's long-term prospects.
With an increase of only 2.7% in the first quarter, electric cars can't be sold in the United States?
This week, major automakers in the U.S. market have released their first-quarter sales results. In total, nearly 3.8 million vehicles were sold in the United States during the quarter, an increase of about 5% year-on-year. In the current environment of about 7% auto loan rates in the United States, this increase is relatively strong.
However, the U.S. market is showing a clear trend of sluggish growth in electric vehicle sales. In the first quarter, electric vehicle sales in the U.S. were 268,000 units, up just 2.7 percent, compared with a 47 percent increase in the same period last year. The market share of electric vehicles also slipped from 7.6% in 2023 to 7.1% in the first quarter.
Tesla, the leader of electric vehicles in the United States, has contributed significantly to the overall slowdown in weak sales. In the first quarter, Tesla delivered 386,810 vehicles, nearly 14% lower than the average analyst estimate of 449,080 vehicles and the first year-over-year decline since 2020, a decline of nearly 9%. Production of automobiles was 433371 units, which was also lower than the market estimate of 452976 units.
Tesla did not separately state its sales volume in each market. According to estimates by industry data firm Motorintelligence.com, Tesla's sales in the U.S. could fall by more than 13% in the first quarter.
Tesla's stock price closed down 4.9% on April 2 after the release of the "disastrous" sales figures. Tesla's share price has fallen 33.62% year-to-date.
Image source: Google Finance
In addition to Tesla, the performance of traditional car companies in electric vehicles is also not satisfactory. GM sold 16,425 electric vehicles in the first quarter, down significantly from 20,000 in the same period a year earlier. Although Ford sold 20,223 electric vehicles in the first quarter, an 86% year-on-year increase, this was thanks to significant price cuts, such as the announcement in February that the 2023 electric SUV Mach-E cut by up to $8,100, which has led to a recent surge in sales. Previously, Ford and General Motors, two of the oldest automakers in the United States, have announced that they will slow down the pace of expansion of electric vehicle production.
According to a report by Business Insider this week, more than 40,000 orders have been cancelled out of the more than 70,000 pre-orders for Fisker's Ocean.
Among the major automotive markets, the U.S. has seen the slowest adoption of electric vehicles. In the fourth quarter of 2023, the proportion of electric vehicles sold in China has reached 23.8%, the leading Norway has reached 80%, and Germany, a traditional automotive powerhouse, has reached 19.6%. This compares with 7.1% in the first quarter of 2024.
Crucially, the U.S. share is down from 8.1 percent in the previous quarter. Bloomberg New Energy Finance believes that once the sales of electric vehicles in an automobile market reach 5%, the mainstream degree of electric vehicles, the investment willingness of car companies and the construction of charging facilities will enter a virtuous circle, and the penetration rate of electric vehicles will begin to accelerate. According to its research, it has taken no more than three years for tram penetration to go from 5% to 15% in all markets, but the US reached the 5% tipping point in 2021 and is already declining, which may break this empirical pattern.
Commenting on the sluggish growth of electric vehicles in the United States, Ivan Drury, head of research at consulting firm Edmunds, explained that new technology advocates and environmentally conscious groups in the United States have already bought electric vehicles, and now car companies are facing more hesitant mainstream users in the United States, with concerns including "charging infrastructure, battery life and insurance costs".
Tesla's strategy has been greatly adjusted, giving up entry-level cars and going all out to develop Robotaxi?
Many analysts believe that the key factor for the further popularization of electric vehicles in the United States is the price. This is also Musk's strategic plan for Tesla, that is, to gradually explore from high-end models, and finally provide affordable electric models for the public, so that Tesla will become a mainstream Volkswagen car company similar to Toyota.
However, some media said that Tesla's business strategy in this area seems to have undergone a major adjustment. On April 5, Reuters exclusively reported that three people familiar with the matter revealed that they learned at a staff meeting in February that Tesla had canceled plans for the Model 2, a cheap entry-level model, and focused on the research and development of the Robotaxi business.
"Suppliers should cease all further activity with H422/NV91 (Model 2 internal codename)", according to an internal communication message dated March 1. "Musk's instructions are to go all-in on Robotaxi," a person familiar with the matter said. The Robotaxi model was also developed based on the Model 2, but production will be significantly reduced.
Subsequently, Musk insinuated on the social media platform X that he was "lying", seemingly denying the halt of Model 2 production. Reuters responded that Musk's denial did not point out the specific inaccuracies in his reporting.
Image source: X platform
However, in the early morning of April 6, Musk posted on X and announced: "Tesla will release a driverless taxi (Robotaxi) product on August 8." ”
Image source: X platform
Tesla's stock price fell 6% at one point after the Reuters report was issued, and finally closed down 3.6% as Musk's denial pared its losses. When Musk announced the unveiling time of the Robotaxi again, Tesla's stock price rose after hours. The volatility of the stock price projects the far-reaching implications of this message that investors are also digesting.
Tesla's current cheapest model is the Model 3, which starts at $39,000, while the planned Model 2 is priced at around $25,000. As recently as January this year, Musk also expected to start production of the Model 2 in the second half of 2025. The entry-level EV is seen as key to boosting Tesla's sales, which could see its annual sales jump from 1.8 million units in 2023 to 4.2 million units in 2028, according to Tesla's own investor filings.
However, analysts point out that Tesla has struggled to compete with Chinese automakers on cheap electric vehicles, a business that could be marginally marginal. At present, the price of BYD's Qin Plus model has dropped to the range of 79,800 yuan, which is more than 10,000 US dollars.
Autonomous driving, on the other hand, paints a longer-term growth story for Tesla and is one of the important support points for its stock price. Musk has predicted that in the future, the number of driverless vehicles will exceed that of human-driven vehicles, and if Tesla cannot achieve full self-driving, its "value is basically zero". Dan Ives, an analyst at Wedbush Securities, who has long been bullish on Tesla, also stressed that AI technology and Full Self-Driving (FSD) are expected to push Tesla's market value to more than $1 trillion amid dismal sales in the first quarter. As of press time, Tesla's market capitalization is $516.7 billion.
Tesla has made a lot of moves on FSD recently. Last week, Tesla announced that it was offering a free one-month FSD experience to all new car buyers in the United States. According to media reports on April 5, Tesla has reopened the FSD free transfer feature, allowing owners of new Model 3, Model Y, Model S and Model X to transfer FSD benefits to another new car for free. Musk also said this week that he is willing to license his FSD system to other car companies.
Musk has been saying for years that self-driving is coming soon, but Tesla has yet to prove it. Currently, autonomous vehicles are only approved in China and the United States, and are limited to strictly restricted experimental use on public roads. At the same time, Tesla is also facing lawsuits and investigations into crashes caused by features related to the driver assistance system Autopilot and FSD.
According to Reuters, the National Highway Traffic Safety Administration inspected 956 accidents that claimed to have used Autopilot. In addition, the regulator has launched more than 40 investigations into accidents involving Tesla's self-driving system, which resulted in a total of 23 deaths.
Disclaimer: The content and data in this article are for reference only and do not constitute investment advice. Do so at your own risk.
National Business Daily