(Reuters) – Tesla missed estimates for first-quarter deliveries on Sunday as rising competition and a gloomy economic outlook overshadowed the electric-vehicle maker’s efforts to prop up demand by cutting prices.
Tesla’s deliveries were 36% higher than a year ago, but below the 52% growth rate forecast by Chief Executive Elon Musk earlier this year.
Investors have been watching Musk’s play that price cuts would boost sales, though they worry about shrinking margins.
Tesla delivered 422,875 vehicles, a record high for the automaker but less than analysts’ expectations of 430,008 vehicles, according to data from Refinitiv.
“If they hadn’t made the price cut, it would have been ugly. I think what it’s telling you is the economy is getting tough,” Gene Munster, managing partner at Deepwater Asset Management, said Sunday.
“They showed acceleration, but they didn’t accelerate to the level that Elon suggested.”
Musk, who has missed his own ambitious sales targets for Tesla in recent years, said in January that deliveries of 1.3 million in 2022 could reach 2 million vehicles in 2023 barring external disruptions.
Tesla delivered 6% more of its Model 3/Model Y flagship vehicles in the first three months of this year compared to the previous quarter. But deliveries for the higher-priced Model X/Model S vehicles plummeted 38%.
The automaker produced more cars than it shipped, making 440,808 vehicles in the first three months of this year.
The automaker ramped up production at new plants in Texas and Berlin, and as production in China recovered from a COVID-19 lockdown.
Some analysts expect Tesla could be pressured to cut prices further as many automakers have adjusted cuts and worries about a slowing economy linger.
Demand prospects are further clouded by US subsidies for electric vehicles, which could fall on some models from April 18.
In January, Tesla slashed prices by as much as 20% globally, sparking a price war after it missed Wall Street’s 2022 delivery estimates.
Tesla’s cuts in China sparked a price war, with a number of Chinese rivals including BYD and Xpeng slashing prices to defend market share amid flagging demand.
Market leader BYD accounted for 41% of so-called New Energy Car sales in the world’s largest car market in the first two months of the year. Tesla, on the other hand, had an 8% share.
Musk warned that the prospect of a recession and higher interest rates mean the EV maker could cut prices to maintain growth at the expense of profits. In January, Musk said the price cuts fueled demand.
Tesla shares are up more than 68% this year on hopes the company would win the price war it started, though the stock remains more than 50% below its November 2021 peak.
Shares have fallen since Tesla’s Investor Day on March 1, when Musk said little about how soon the EV maker could launch a more affordable mass-market vehicle.
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