In a disappointing turn of events for electric vehicle giant Tesla, sales fell sharply last quarter, with the company delivering 386,810 vehicles from January through March, almost 9% below the same quarter last year. This figure also fell well short of Wall Street expectations, with analysts predicting Tesla would deliver 457,000 vehicles. The company attributed the decline to various factors, including phasing in an updated version of the Model 3 sedan, plant shutdowns due to shipping diversions in the Red Sea, and an arson attack that knocked out power to its German factory.

Last year, Tesla dramatically lowered prices for some models, with reductions as high as $20,000. In an attempt to draw in more buyers, the company also temporarily cut prices on the Model Y by $1,000 in March. However, these price cuts have impacted Tesla's profit margins, leading to a decline in investor confidence. Shares of Tesla have tumbled 6.3% at the opening bell, continuing an extended decline that has seen about 34% of the company's value wiped out so far this year.

Wedbush analyst Dan Ives, typically bullish on Tesla, described the first-quarter deliveries as a "nightmare quarter" and reduced his one-year price target for the stock. He noted that Tesla lost production time in Germany due to the arson attack, while production was slowed by an upgrade to the Model 3. Deliveries of the Models 3 and Y, Tesla's top sellers, fell 10.3% year over year to 369,783, while sales of other models rose almost 60% to 17,027.

Analysts are now lowering their expectations for Tesla's quarterly earnings, with Citi Analyst Itay Michaeli cutting his full-year 2024 earnings per share estimate. Investor patience is starting to wear thin, with Ives warning that Tesla is at a "fork in the road" and must navigate through this turbulent period to avoid darker days ahead. The softer-than-expected sales have raised concerns about Tesla's growth story, leading to a decline in investor confidence and a significant drop in the company's stock value.