Wall Street's expectations are overly optimistic, Tesla's Q1 sales saw the largest drop in history

As the first quarter comes to a close, Wall Street analysts have made forecasts for Tesla's (TSLA.US) delivery volume. Many analysts have lowered their expectations for vehicle deliveries, and as the data is released, it appears that Wall Street's expectations were still too optimistic.

According to the Smart Finance app, Tesla delivered only 386,810 vehicles in the first three months of this year, the largest gap from average forecasts in 7 years. Tesla's stock price fell by 4.9% on Tuesday, expanding its decline in 2024 to 33%, ranking second in declines among S&P 500 index components.

Tesla warned that the growth rate for this year will "significantly decline," attributing it to rising interest rates. Despite significant price cuts, many consumers still cannot afford Tesla's cars. The company faced multiple interruptions at its factory outside Berlin. Musk's comments on Twitter drove away potential buyers, making competition in the Chinese electric car market even fiercer.

Despite these obvious unfavorable factors, most analysts still expect Tesla's car sales to exceed those of a year ago. However, the opposite happened, with its delivery volume ultimately dropping by 8.5%.

Gene Munster, managing partner at Loup Ventures, said, "No matter how you slice it, the data is ugly. Demand is soft. Rates are still high. Has Musk's image hurt Tesla's sales in the U.S.? The direction is negative."

Tesla attributed part of the decline in sales to the shift towards the upgraded Model 3 sedan, which along with the Model Y accounted for 96% of the quarter's deliveries. The company also mentioned shipping delays related to the Red Sea, as well as suspected arson attacks that led to several days of production loss in Germany.

Nevertheless, Tesla produced 46,561 more cars than it delivered to customers this quarter, marking one of the largest mismatches in the company's history.

Deutsche Bank analyst Emmanuel Rosner said, "Beyond the known production bottlenecks, there may be serious demand issues." Rosner rates Tesla's stock as "Buy." In the weeks leading up to Tesla's data release, he lowered delivery volume expectations twice, but still overestimated Tesla's sales by more than 24,000 vehicles Tesla has not disclosed quarterly car sales by region, but the United States and China have always been its largest markets. The company produces Model S, X, 3, and Y in Fremont, California, and Model 3 and Y in Shanghai. It also produces Model Y at factories outside Austin and Berlin.

At the end of last year, Musk introduced the Cybertruck with a stainless steel shell. The company has not disclosed how many pickups it has produced and delivered, mixing them with data from other models including Model S and Model X. Compared to the past few quarters, the share of Tesla's car leasing deliveries remains low.

Despite facing many challenges, Tesla has reclaimed the title of the world's largest electric vehicle seller from China's BYD. In the first quarter of this year, BYD delivered 300,114 pure electric vehicles globally. Including plug-in hybrid vehicles, BYD sold a total of 626,263 vehicles