With the EV market changing, Tesla faces numerous obstacles that impact its production, delivery, and general performance. The company has difficulty managing challenging conditions, from supply delays to heightened competition and internal scrutiny.
Several variables, such as shifting borrowing rates that reduce affordability and heightened competition from competitors promoting their electric car lines, have worsened Tesla’s problems. Demand has decreased in critical areas such as China, even with price reductions in response, while rivals such as BYD have made notable advancements.
For Tesla, the first quarter of this year was tough. An alleged arson incident reinforced supply issues brought on by Houthi strikes in the Red Sea, which momentarily stopped the company’s German production operations. This time has been characterized by analysts as a “train wreck into a brick wall,” highlighting the increasing strain on CEO Elon Musk to steer the business through these turbulent times.
A slight year-over-year decrease in production was observed in the first quarter, with 439,701 cars produced in 2023 compared to 433,371 in 2024. On the other hand, deliveries took the brunt of the difficulties, falling more than 8% annually and being the first quarterly yearly decline since 2020. Deliveries were notably 20% lower than in the prior quarter, indicating a concerning pattern for the business.
While more general industry trends point to competitors lowering their aspirations for electric cars in response to lower-than-expected demand, Tesla faces particular difficulties. The company’s problems have worsened by scrutiny of its autonomous car software, which was hailed as a growth engine. Safety issues with power steering have been exacerbated.
Furthermore, Tesla’s future has been further clouded by investor concerns about product weariness and Elon Musk’s expansion into other businesses, most notably his engagement in the social media startup X.
