It was an “ugly” performance, according to critics, as price reductions failed to spur demand in a fiercely competitive industry. On Tuesday, Tesla reported a fall in quarterly deliveries for the first time in almost four years and missed Wall Street projections.

The Elon Musk-led company’s shares fell 5.2% to $166.08 in the afternoon on Tuesday, marking a $30 billion loss in market worth. This year, the shares have dropped by almost 33% already.

Tesla is preparing for a downturn in sales in 2024 following years of strong growth that helped the company become the most valuable carmaker in the world.

The EV manufacturer has been sluggish to update its outdated models since competitors in China, the biggest auto market in the world, are releasing less expensive models and high borrowing rates have diminished consumer desire for expensive goods.

Compared to a year earlier, Tesla’s first-quarter deliveries decreased by 8.5% to 386,810 vehicles, while the company produced 433,371 vehicles during that time. Based on the average forecast of 18 analysts surveyed by Visible Alpha, Wall Street had anticipated that Tesla will produce 454,200 cars.

When Tesla had to halt manufacturing because to the COVID-19 pandemic in the second quarter of 2020, the carmaker last experienced a decline in sales.

Tesla attributed the decline in output in part to plant shutdowns in Berlin brought on by the effects of the Red Sea crisis and an arson assault, as well as efforts made by the company to ready its Fremont, California, facility to accommodate higher production of the revised Model 3.

However, analysts noted that Tesla built 46,000 more cars than it sold in the first quarter, indicating a slowdown in demand.

According to a letter from Deutsche Bank analyst Emmanuel Rosner, the vehicle inventory “confirms that beyond the known production bottleneck, there may also be a serious demand issue.”

In China, market leader BYD—which surpassed the American company to become the world’s largest EV manufacturer in the fourth quarter—and recent entry Xiaomi have given Tesla fierce competition.

Xiaomi, a manufacturer of smartphones and appliances, saw a $4 billion increase in market value on Tuesday after releasing its sleek first vehicle, an electric vehicle that is less expensive than Tesla’s Model 3.

BYD, which sold over 300,000 battery-electric cars (BEVs) during the quarter, lagged behind Tesla.

Nevertheless, the Chinese automaker supported by Warren Buffett reported a 13% global surge in BEV sales in the first quarter compared to the same period last year. Sales of Hyundai Motor’s Ioniq 5 and Ioniq 6 electric vehicles increased by about 80% to 10,468 units in the United States in the first quarter, according to the company.

Deepwater Asset Management managing partner Gene Munster described the quarter as “ugly” for Tesla, citing high financing rates and waning enthusiasm for EVs as the reasons. On the long-term prospects of the company, though, he remained optimistic.

According to polls and experts, some potential Tesla consumers in the United States are being turned off by CEO Musk’s demeanour, his inclination towards right-wing ideology, and his divisive public pronouncements.

Separately, Tesla is dealing with a number of issues related to its reputation, such as litigation and inquiries into its Autopilot driver-assistance system and accusations—first made public by Reuters—that it falsified the in-dash driving-range calculations in its vehicles. In December, Reuters revealed that the carmaker had long known that its suspension and steering components were faulty, but it was blaming drivers for their frequent failures.

Tesla has blasted the suspension problems study as “wildly misleading” and laid the burden for drivers’ negligence on the road when their cars crash while operating on Autopilot. According to the company, no active inquiry has turned up any evidence of misconduct.

Analyst Dan Ives of Wedbush Securities described Tuesday’s findings as “an unmitigated disaster” and a turning point for Tesla.

In a research note, he stated, “This was a train wreck into a brick wall quarter for Musk & Co.”

Tesla also issued a warning in January, stating that it expects “notably lower” sales growth this year as it concentrates on building its next-generation electric vehicle.

In addition to 369,783 Model 3 and Model Y deliveries, Tesla also shipped over 17,000 other models, such as the Cybertruck, Model S sedan, and Model X premium SUV.

Analysts claim that although California-based EV manufacturer Rivian posted better-than-expected quarterly car deliveries, Tesla’s earnings and concerns about demand caused the stock to decline.

(Adapted from TheGuardian.com)