Premium electric carmaker Tesla’s share price has slumped following news that production and deliveries were down in the first quarter. Deliveries were a particular cause for concern (at 63,000 units, down a hefty 31% on the previous quarter).
Dave Leggett, Automotive Editor at GlobalData, a leading data and analytics company, offers his view:
“Tesla’s apparent difficulties in the first quarter are not entirely unexpected. In particular, ramping up volume of the Model 3 and having just one main production facility in the US, brings logistics and distribution challenges as shipments start to big markets overseas. The Model 3 order bank is particularly large in Europe and China.
“However, there are concerns emerging that deliveries of the higher margin Model S and Model X models are drying up (combined, down 56% from previous quarter at 14,150 units), with no refresh for either product scheduled anytime soon. Even allowing for a shift in production capacity this year towards the newer Model 3, the Q1 numbers will raise alarm bells. The Model S has been around since 2012, so it’s hard to see much recovery in prospect as it gets even older.
“And this is happening as competition steps up with more electric vehicles coming to market, such as Audi’s e-tron and Mercedes-Benz’s EQ C. On the upside though, orders for Model 3 remain strong. Tesla said US orders for Model 3 vehicles significantly outpaced what it could deliver in Q1.
“Next year sees the Model Y crossover – which will be made at a new plant in Shanghai – added. That should provide a boost for the company.
“The big challenge for Tesla this year is to successfully execute the ramp-up of volume on Model 3, smoothing out the initial distribution snags, while also avoiding excessive decline to the Model S and Model X. Tesla has reaffirmed its guidance of 360,000 to 400,000 vehicle deliveries in 2019. After a disappointing Q1, the rest of the year will have to go very well indeed to hit that.”