Tesla (NASDAQ: TSLA) shares are at a year-to-date nadir today - now down around 33 percent so far this year - after the EV giant missed Wall Street's consensus expectations for quarterly deliveries by the widest margin on record. With analysts now crowning Tesla as the "most hated among the Magnificent 7" grouping of high-flying stocks, the sentiment around the EV giant has undoubtedly hit the proverbial rock bottom. Nonetheless, a more nuanced study of Tesla's quarterly delivery numbers does present a case for cautious optimism.
Tesla's Disastrous Quarter
As we noted in a separate post earlier today, Tesla has now disclosed that it delivered 386,810 units in Q1 2024 against a production level of 433,371 units, constituting not only the first year-over-year contraction in quarterly deliveries since the pandemic-driven mayhem in Q2 2020 but also the largest miss vs. the consensus expectations of analysts on record. For reference, Wall Street analysts expected Tesla to deliver 431,125 units in the just-concluded quarter, which corresponds to a 10.3 percent miss relative to the actual numbers. On a year-over-year basis, Tesla's quarterly deliveries shrank by 8.5 percent.
1/2 Wrong. They produced 433K cars, yet sold just 387K, meaning inventory grew a record +46.6K cars (or up +42% QoQ), which is a ~$2.03bn drain to cash... IN 1Q24E ALONE. This isn't a Musk issue, or a logistics issue, or a factory issue, etc. People just don't want their cars. https://t.co/rqdgC1JPUC
— Gordon Johnson (@GordonJohnson19) April 2, 2024
The bad news does not end here, however. Tesla's inventory increased by a whopping 46,561 units in Q1 2024, translating into a cash drain of around $2.03 billion.
Can someone please explain why production slowdowns hurt Tesla deliveries in the quarter during which Tesla had the largest inventory build in its history? pic.twitter.com/jw0H9bfAoM
— B Graham Disciple (@bgrahamdisciple) April 2, 2024
Tesla tried to defend its subpar quarterly performance by identifying the various idiosyncratic challenges that it faced over the past few weeks, including suboptimal production at Giga Fremont due to the ongoing Model 3 Highland production line upgrades, the continuing Houthi attacks in the Red Sea and the resulting diversion of tanker traffic, and the highly disruptive arson attack on Giga Berlin by "eco-terrorists" a few weeks back. However, as many people quickly pointed out, most of these disruptive events affected Tesla's production capacity and do not explain why the EV giant's inventory increased by the widest margin in history, clearly alluding to an underlying demand problem.
Silver Lining: Fierce Demand for New Models
Here is the silver lining, though. BYD - inarguably Tesla's biggest competitor in China - also just concluded a shoddy Q1, managing to record quarterly deliveries of only 300,114 units and corresponding to a quarter-on-quarter decline of 43 percent! This indicates that macro and industry-wide factors are clearly at play here.
Xiaomi SU7, the China smartphone maker’s first EV, with styling like a Porsche and a starting price of $29,900, sold out its 2024 production of 90K units within 24 hours. Customers had to put down a ¥5,000 ($850) deposit. https://t.co/SIKI5J2O4e
— Gary Black (@garyblack00) April 2, 2024
Yet, there is more. Xiaomi's newly unveiled ~$30,000 SU7 electric vehicle is now sold out for the entire year, and that too within the span of just 24 hours! For context, Xiaomi is planning to produce 90,000 units of the SU7 this year. This suggests that there is ample demand in the market for newer and flashy models. This bodes well for Tesla's Model 3 Highland and the Cybertruck, which will likely enter volume production in 2025.
After today's stock market bleeding, Tesla is now trading at a Trailing Twelve Month (TTM) Price-to-Sales (P/S) multiple of 5.40x. This is a fairly attractive valuation level relative to historical precedents.
Going forward, Tesla has to focus on the following aspects to regain solid footing:
- Ensure a speedy rollout of the Model 3 Highland
- Try to achieve volume production of the Cybertruck on a war footing
- Increase its ad spending
At the time of writing, Tesla shares are down 5 percent and trading at the $166.30 price level.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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