Tesla’s first-quarter deliveries slumped to 336,000 compared to 387,000 in the first quarter of 2024, a 13% drop. Meanwhile, it produced 362,615 cars for a -16% decrease year over year. Energy storage products saw deployment growth at 156% since last year, with 10.4 GWh delivered in Q1.

The electric-car maker’s shares tumbled in the hours after the announcement, only to recover and post a gain later in the session after rumors Tesla co-founder and CEO Elon Musk would leave his position as President Trump’s chief cost cutter. The Austin, Texas-based company’s April 2 news release explained the delivery slump as a result of production interruptions connected to its rollout of a new version of its Model Y all-electric SUV. The introduction of the lower-cost Model Y “continues to go well,” the company said.

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Production Disruptions and Investor Sentiment

While Tesla emphasized production issues related to the changeout of Model Y lines for new products, elsewhere, political backlash against Musk’s role in the Trump administration and as a backer of conservative political candidates was widely given credit for deliveries roughly 50,0000 drop in deliveries in the first quarter of 2024.

Still, the quarterly delivery results were significantly worse than anyone expected. The general consensus forecast called for shipments of 390,000, well above actual deliveries. Reflecting this disappointment, Tesla stock opened lower on the day of the announcement and the decline continued until shares were trading more than 6% below the previous close.

The early action in the post-release session continued a slump that began when the stock hit its all-time high in December. Trading since then has seen Tesla valuation slide more than 40%. However, it is still up more than 50% over the past 12 months.

In an indication of how traders viewed the influence of Musk’s political activism, later in the same session the stock unexpectedly rose as rapidly as it fell and closed up 5% for the day. The cause for this was apparently a rumor that Musk would soon leave his position as a Trump advisor and de facto head of the Department of Government Efficiency. Musk later denied he planned to leave the DOGE post.

In the wake of the delivery shortfall, some of the analysts following the stock have reduced their share price forecasts for Tesla stock. However, despite the recent bad news, Tesla’s financial position remains strong, with ample cash reserves, robust cash flow and attractive profit margins. The company’s market position remains among the best among global EV makers. The lower-priced Model Y that hit showrooms in March is expected to appeal to a new market of more budget-minded shoppers.

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Future Developments

The company will provide more details about its situation, including the recent delivery figures, when it releases first-quarter financial performance data on April 22. The same day as the first-quarter report is released, Tesla will hold a webcast to update analysts and investors. The webcast will take place at 4:30 p.m. Central time. Investors can experience the webcast live by visiting https://ir.tesla.com. A recording of the webcast will be available on the company’s website two hours after the live version.

Along with the quarterly financial report release, Tesla has some additional events scheduled that are likely to keep the company in the news. On April 10, it will begin selling its vehicles in Saudi Arabia for the first time. And in June it is expected to roll out its fully self-driving taxi service, in Austin.

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Bottom Line

Tesla’s first-quarter shipments of electric vehicles were below expectations and led to a sharp but brief sell-off in the stock. While the company explained the shortfall as a result of a production interruption related to rollout of a new model, Elon Musk’s political activities are also widely seen as a factor. Tesla upcoming developments include its first-quarter financial report on April 22nd and a new robotaxi venture expected to roll out in Austin in June.

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