Tesla reported a significant drop in vehicle deliveries for Q1 citing the production ramp of its updated Model 3, an arson attack at its Gigafactory Berlin, and the Red Sea conflict as partial reasons for the volume decline. 

The company produced 433,371 vehicles and delivered 386,810 during the first quarter, a press release says. 

It is the first Q1 decline for the company since 2020, according to Yahoo Finance. It also reported delivery and production are “well below” Q1 estimates for the company.

Tesla’s Q1 deliveries are a decrease from Q4 and year-over-year, Yahoo reports. 

“While we were anticipating a bad 1Q, this was an unmitigated disaster 1Q that is hard to explain away,” Yahoo reports Wedbush analyst Dan Ives said in a note shortly after the report’s release. “We view this as a seminal moment in the Tesla story for Musk to either turn this around and reverse the black eye 1Q performance. Otherwise, some darker days could clearly be ahead that could disrupt the long-term Tesla narrative.”

On Friday, Yahoo reported Tesla’s shares dropped 3.6% and 6% for the entire week. 

Reuters also recently reported the company canceled its plans to build an inexpensive electric vehicle (EV). Instead, the company will turn its attention to a self-driving robotaxi. 

Tesla and other automakers are facing competition globally from Chinese EV makers that Reuters says are “flooding the market with cars priced as low as $10,000.” 

Elon Musk posted on X that Reuters was lying. He later posted that Tesla would unveil its robotaxi Aug. 8. 

Ford CFO, John Lawler, also recently mentioned a shift in focus at the company as it faces competition with China. Instead of turning away from small EVs, he said the company plans to focus more on them. 

“The real competition, where we see it, is the low-cost EVs from China, as well as Tesla,” Lawler said. “Of course, we are going to have large EVs as well but they are going to be very limited.”

The announcement came following reports the company was moving factory workers from the F-150 Lightning to other projects. 

In recent months, Tesla has slashed prices on the Model Y and Model 3 as Chinese companies, such as BYD, do the same, according to Investor’s Business Daily. 

Late last month, Musk asked employees to sign up for additional shifts to help deliver cars to customers in the last days of the first quarter as the media was already suspecting the company might be seeing a decline in deliveries. 

Fisker, another fully EV automaker, has also seen a difficult Q1 as it sits on the brink of bankruptcy. The company’s stock was delisted last month and it announced the termination of a deal with a major automaker. This all followed the announcement that the company would suspend production for six weeks. 

Automakers seem to be sitting on a pivotal moment for EV development, with some abandoning plans and others doubling down. 

Apple abandoned its EV plans while Stellantis announced layoffs in recent weeks layoffs of about 400 U.S. workers as it shifts focus to making a more affordable EV. 

BMW announced recently that it plans to spend more in research and development (R&D) than it ever has before in 2024 with a focus on electrification of its vehicle portfolio, in-car digital innovations, software stacks, and automated driving. 

As most major automakers seem to be focused on developing affordable smaller EVs, Nissan recently announced its plans to work with Mitsubishi on electric trucks as it pushes toward a goal of more electrification in future years. 

The shake-up in the EV world follows reports of the Biden administration relaxing its timeline for its push on EV production. A decision that has possibly caused states to also rethink their plans with Maine’s Board of Environmental Protection voting down a clean car program and Democrats and Republicans both sounding concerns about their state’s efforts. 

It is also still unknown how multiple global supply impacts could impact the OEMs including EV production in coming months, including the collapse of the Francis Scott Key Bridge in Baltimore, a major 7.2 earthquake in Taiwan, and conflicts in the Red Sea.

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