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Tesla sales falter as the US electric vehicle market cools off

Tesla said it delivered more than 386,000 vehicles from January to March, a decline from the 423,000 it sold in the same time period last year.

A Tesla vehicle at a charging station
Nam Y. Huh / AP
SMS

Sales of Tesla vehicles dropped nearly 9% last quarter thanks to increased competition and an overall slowdown in electric vehicle sales.

Tesla said it delivered more than 386,000 vehicles from January to March, a decline from the 423,000 it sold in the same time period last year.

Analysts had expected sales around 457,000.

Tesla said shipping delays and a reworked Model 3 contributed to its slowdown. Analysts said the company's incentives and discounts weren't doing enough to keep demand for its vehicles growing.

Tesla made price cuts of as much as $20,000 for certain vehicle models last year, and in March of this year announced a short-term $1,000 discount on its most popular Model Y. Together, the cuts reduced Tesla's profit margins.

Tesla also told investors this year it expects "notably lower" growth in demand while it prepares to launch a more affordable vehicle known as Model 2.

Tesla shares dropped 4.9% during normal trading on Tuesday, continuing a slide that has cut 33% of Tesla's value this year. It led other electric vehicle companies lower for the day as well: Rivian lost 5.2% and Lucid fell 3.5%.

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This comes as demand for electric vehicles cools off in the U.S. EV sales climbed by 47% last year but slowed down toward the end of the year. As of 2023, the EV market share is 7.6% of the U.S. total.

Other electric offerings have also struggled. Ford had to cut prices and slow down production of vehicles like the Mustang Mach E to secure sales of 2023 models.