in a decline

Tesla starts off 2024 with tumble in sales

Tesla, based in Austin, has reported its biggest drop in sales in four years. Photo courtesy of Tesla

Tesla sales fell sharply last quarter as competition increased worldwide, electric vehicle sales growth slowed, and price cuts failed to lure more buyers.

The Texas company said Tuesday that it delivered 386,810 vehicles worldwide from January through March, almost 9% below the 423,000 it sold in the same quarter of last year. It was the first year-over-year quarterly sales decline in nearly four years.

Sales also fell short of even the most bearish Wall Street expectations. Auto industry analysts polled by FactSet were looking for 457,000 vehicle deliveries from Tesla Inc. That's a shortfall of more than 15%.

The company blamed the decline in part on phasing in an updated version of the Model 3 sedan at its Fremont, California, factory, plant shutdowns due to shipping diversions in the Red Sea, and an arson attack that knocked out power to its German factory.

But TD Cowen Analyst Jeffrey Osborne wrote in a note to investors that weaker March sales indicate that incentives, including discounts and a free trial of “Full Self Driving” software, “did not work as demand deteriorated.”

Despite the sales decline, Tesla was able to retake its global EV sales crown from China's BYD, which sold just over 300,000 electric vehicles during the quarter, Osborne wrote.

In its letter to investors in January, Tesla predicted “notably lower” sales growth this year. The letter said Tesla is between two big growth waves, one from global expansion of the Models 3 and Y, and a second coming from the Model 2, a new, smaller and less expensive vehicle with an unknown release date.

“This was an unmitigated disaster 1Q that is hard to explain away,” wrote Dan Ives, an analyst with Wedbush who has been very bullish on Tesla's stock. The drop in sales was far worse than expected, he wrote in a note to investors.

The quarter is a “seminal moment” in the Tesla growth story, Ives wrote, adding that CEO Elon Musk will have to turn the company around. “Otherwise, some darker days could clearly be ahead that could disrupt the long-term Tesla narrative.”

Ives maintained his Outperform rating on Tesla's shares and cut his one-year price target from $315 to $300. Ives estimated that China sales slid 3% to 4% during the period.

Shares of Tesla tumbled 4.9% to close Tuesday at $166.63, continuing an extended decline. Investors have shaved 33% off the value of the company so far this year, dumping shares after growing leery of the tremendous growth story that Tesla has been telling.

“Street criticism is warranted as growth has been sluggish and (profit) margins showing compression, with China a horror show and competition increasing from all angles,” Ives wrote.

Tesla dramatically lowered U.S. prices by up to $20,000 for some models last year. In March it temporarily knocked $1,000 off the Model Y, its top-selling vehicle. Those price cuts narrowed the company’s profit margins and spooked investors.

Analysts polled by FactSet expected the average selling price for Model Y to be $41,000 last quarter, $5,000 less than a year ago and $15,000 lower than the peak of $56,000 in June of 2022.

Tesla's sales numbers also pulled down shares of its U.S. EV competitors. Shares of Rivian fell 5.2%, while Lucid stock dropped 3.5% on Tuesday.

Deliveries of the Models 3 and Y, fell 10.3% year over year to 369,783. Sales of the company's other models, the aging X and S and the new Cybertruck, rose almost 60% to 17,027. Tesla produced 10.7% more vehicles than it sold during the first quarter.

Softer-than-expected first-quarter sales are reducing analyst expectations for Tesla's quarterly earnings ahead of their scheduled release on April 23.

Tesla’s sales come against the backdrop of a slowing market for electric vehicles in the U.S. EV sales grew 47% last year to a record 1.19 million as EV market share rose to 7.6%. But sales growth slowed toward the end of the year. In December, they rose 34%.

Updated EV sales numbers will come later Tuesday when most automakers report U.S. sales.

Other automakers also have had to cut electric vehicle production and reduce prices to move EVs off dealership lots. Ford, for instance, cut production of the F-150 Lightning electric pickup, and lopped up to $8,100 off the price of the Mustang Mach E electric SUV in order to sell 2023 models.

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A View From HETI

Homeowners can now connect some vehicles right to their home’s breaker box. Getty Images

Winter Storm Uri, the multiday freeze that slammed Texas in February 2021 and pummeled the state's power grid, has been on Kenneth Kovar's mind ever since. Though the resident of New Braunfels didn't lose power at the time, he wasn't able to run his septic tank — it is independent from local systems. He had to fill his toilets with water from his backyard pool.

So when Kovar, 64, bought a Ford F-150 last fall, his hope was to be better prepared for any new crisis.

“I was interested in trying to find some sort of power backup situation,” he said.

Now, Kovar has a setup from Ford that allows drivers of certain F-150 models to plug their vehicle directly into their electric meter to power parts of their home during an outage.

It is the latest example of automakers broadly adapting their electrification technologies to the home energy business, especially as demand on the grid increases and sales of electric vehicles slow. Car companies are looking to leverage their multibillion dollar EV investments to tap into a promising market in vehicle, home and grid technology, both for backup power and for supporting electrical grid resiliency.

“They’re trying to look for other businesses that they might sell into,” said Parth Vaishnav, assistant professor of sustainable systems at the University of Michigan.

Ford's latest connects F-150 drivers to their meter

Drivers of the F-150 PowerBoost hybrid and F-150 Lightning electric pickup trucks can now plug in a one-foot long adapter to a 240-volt outlet onboard. That adapter — which Ford made with company Global Power Products — makes the vehicle compatible to plug into a longer, separate cable. That cable connects to a transfer switch installed directly on one's electric meter.

Through the adapter and cable series, homeowners can connect their vehicle essentially right to their home’s breaker box. The homeowner simply turns on and off which breaker switches they want for which devices they want powered.

“The way we think about it, especially for customers who already have a compatible vehicle is, you already own the power source, it’s in your driveway,” said Amanda Roraff, Ford's grid and energy services business acceleration lead.

The Lightning might provide power for two to three days, depending on what home devices are being used, and the PowerBoost Hybrid, up to five days on a single tank of gas.

The automaker says its solution is a less expensive way to supply backup power. Conventional, diesel-powered portable generators and full-home standby setups require expensive installation, costing several thousands of dollars. This solution, which also requires professional installation at the meter, starts around $1,100.

The setup only applies to about 200,000 vehicles so far, and it is also exclusively for outages. Ford also offers its Home Integration System for bidirectionality, sending power both from the vehicle to the home and from the home to the vehicle, while also being able to feed the grid.

Other automakers are boosting their energy solutions

Over 630,000 U.S. vehicles already have this functionality, estimates say, and automakers are rapidly expanding their available options with the goal of full vehicle-to-grid support in the long run.

South Korean auto brand Kia and Wallbox, an EV charging company, have teamed up so that drivers of eligible compatible vehicles can have home power backup during outages or during periods of high demand, to cut their utility use. They can send power back to the grid.

Tesla’s technology is similar — allowing drivers of equipped vehicles to connect to their home using additional Tesla hardware. The Cybertruck provides full vehicle-to-home capability, where other Tesla models can only connect to and power specific devices or appliances.

General Motors is also in the energy space.

A recent partnership with WeaveGrid, for instance, allows homeowners who drive certain GM EVs — and have the automaker’s home system and a proper grid interconnection — to enroll in some grid reliability utility programs. Once an outage is detected, GM’s vehicle-to-home tech has the capability to disconnect one's home from the grid and start supplying power from their GM EV.

“If you can imagine the future as we go forward, it's having the ability — now that we have this single platform — that allows our customer to experience our system,” said Wade Sheffer, vice president of GM energy, “but also can have the full control of the energy.”

The capability is an important lifeline amid EV sales slowdown

Not only is this business critical amid growing grid demand and increasing power outages, experts say automakers need to pivot with the EV market less active under current U.S. federal policy. Pure EV sales in the U.S. year-over-year are down 23.8%, according to a July Cox Automotive report on the first half of 2026. This demonstrates what an asset that EV and hybrid ownership can be.

The tech is not without challenges.

On the industry side, these systems have to undergo third-party testing to ensure they meet safety standards, and the vehicle and the charger need to be programmed to communicate. It also requires the approval of the utility where the capability is being used. It could take years to get an interconnect agreement.

On the customer side, homeowners need to understand their vehicles' abilities and how to self-manage their system. It also just brings another generator of power into the home mix.

Still, experts see opportunity, especially with interest in EV sales high outside of the U.S.

“We already know during an outage, its impact, providing electricity to the home,” said Scott Samuelsen, engineering professor emeritus at the University of California, Irvine. “This is going to become very, very popular.”

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