Tesla Stock Plummets Over 5% on Disappointing Q1 Delivery and Production Figures

Tesla Stock Suffers Sharp Decline as Q1 Deliveries and Production Miss Expectations

On Thursday, Tesla (TSLA.O) shares experienced a notable drop exceeding 5%, marking its largest single-day decline of the year. This significant fall came after the company released its first-quarter vehicle delivery and production report, which revealed a decrease compared to the preceding quarter, albeit with modest year-over-year growth.

Delivery and Production Figures Fall Short of Projections

Data revealed that Tesla's total vehicle deliveries for the first quarter stood at 358,023 units, while total vehicle production reached 408,386 units. Analysts' expectations, according to StreetAccount estimates, had projected deliveries to reach 370,000 vehicles. Furthermore, a compilation of internal consensus expectations released by Tesla on March 26 indicated an average forecast of 365,645 units for the first quarter. On a year-over-year basis, deliveries saw a 6% increase compared to the 336,681 vehicles delivered in the same period last year. However, the first quarter of 2025 saw a 13% decrease in deliveries compared to the first quarter of 2024. For the full year 2025, Tesla's annual delivery projections have been lowered from 1.79 million vehicles in 2024 to 1.64 million vehicles.

The company stated in its latest report that its entry-level Model 3 sedan and its best-selling Model Y SUV combined accounted for 341,893 deliveries in the quarter. Delivery figures are considered Tesla's closest proxy to sales data, though the company has not precisely defined them in its shareholder communications. Notably, the Model S and Model X have been in a state of decline for an extended period. Last year, Model 3 and Model Y constituted 97% of the company's total deliveries.

Factors Contributing to Tesla's Performance

The decline in Tesla's automotive sales for 2025 is attributed to several factors, most prominently escalating global competition, alongside consumer backlash against the political stances of CEO Elon Musk. Musk has supported Donald Trump's campaigns and participated in his second administration, and has also publicly endorsed the far-right, anti-immigration German party AfD and the British anti-Islam activist Tommy Robinson.

Additionally, Tesla and the broader US electric vehicle market have been impacted by the cancellation of the $7,500 federal tax credit for vehicle purchases, effective from September. However, sales of used electric vehicles have seen an uptick since the late February strikes by the US and Israel against Iran, which led to heightened tensions and rising oil prices.

Tesla's automotive gross margins and the status of supply chain disruptions are likely to be key focal points for the market as the company prepares to release its first-quarter financial results on April 22.

Strategic Pivot and Product Adjustments

Although CEO Elon Musk is shifting the company's focus towards the development of autonomous Cybercabs and Optimus humanoid robots, Tesla has not yet brought these products to market and continues to rely primarily on vehicle sales for revenue. In January, Tesla announced it would cease production of its flagship Model S and Model X, with plans to repurpose production lines at its Fremont, California factory for the manufacturing of Optimus robots.

Musk posted on his social platform X on Wednesday that orders for the Model S and Model X had "reached the end of the line," though some inventory remains. He added, "We will have a formal ceremony to mark the end of an era. I love these cars."

The angular, steel-bodied Cybertruck, which Tesla began delivering to customers in late 2023, has not yet become a mainstream success. The company anticipates increasing deliveries of its all-electric Semi truck in 2026, an 8-class truck promising a range of 500 miles.

Energy Business Faces Pressure Amidst Market Environment

In its energy business, Tesla reported deploying 8.8 GWh of battery storage systems in the first quarter, down from a record 14.2 GWh in Q4 2025 and 10.4 GWh in Q1 2025. Tesla's battery storage offerings include the Powerwall backup battery for homes, as well as larger Megapack and Megablock systems for data centers and utilities.

Jed Dorsheimer, an equity analyst at William Blair, stated in a report on Thursday that they were "not surprised" by Tesla's automotive figures, as "global EV demand outside of China remains under pressure, and Tesla is proactively sacrificing its EV business for a fully autonomous future."

However, Tesla's energy business missteps are of greater concern. The report noted, "This business can be volatile, heavily influenced by customer grid interconnection timelines, but that does not fully explain the decline. We are perplexed as to what occurred on the supply side this quarter."