Unpacking Tesla’s Delivery Downturn: What It Shows About The EV Industry

Tesla has long since basked in the light of its recognition as one of the top dogs of the EV industry. Despite being founded in 2003, the brand, named after famous American inventor Nikola Tesla, only shot to fame in 2017 with the success of its Model 3 vehicle managing to tap into the mainstream market. Since then, it has enjoyed status as one of the most globally recognised EV players.

Alas, things have since taken a turn for the worse for the one high-flying Tesla brand.

Despite achieving the status of the world’s most popular plug-in electric car in 2020, according to Investing.com, Tesla is currently grappling with what can only be referred to as a delivery disaster, reaching its lowest levels since 2022. This downturn prompts questions about the factors contributing to the current state of this once-leading EV brand and what it demonstrates about the broader industry.

Tesla’s Delivery Disaster

Tesla has undeniably had a rocky ride in 2024. According to a recent BBC report, the past three months have witnessed a significant decline in its deliveries, with the company handing over fewer than 387,000 electric cars to customers – marking the lowest quarterly figure in over a year.

This 8% downturn is the result of several pressing issues confronting Tesla, including a fire at its European factory and global shipping disruptions, among other challenges.

Whilst these delivery disruptions will have certainly made for some unhappy customers, it seems shareholders aren’t too thrilled either, evident in the more than 4% drop in shares. This decline adds to the company’s challenges, which have been accumulating since last year, leading Wedbush Securities analyst Dan Ives to describe the current situation as more than a mere inconvenience but rather an “unmitigated disaster.”

Despite Tesla having previously struggled through challenges, this marks the first time the company has had an annual fall for any quarter since 2020, with deliveries down a notable 20% compared with the final quarter of 2023.

A Bumpy Ride For The EV Industry

Tesla’s recent troubles aren’t to say the entire EV industry is in dire straits. These vehicles have much to recommend them and undoubtedly remain popular despite Tesla’s current struggles. However, this isn’t to say that the industry as a whole hasn’t had to ensure a bumpy ride.

While Tesla’s delivery issues may seem linked to specific incidents like the fire at its European factory and global shipping disruptions, attributing them solely to distribution problems would overlook broader industry trends.

Tesla’s recent share drops, caused by challenges such as rising interest rates affecting affordability and intensified competition from rival EV manufacturers, underscore that these issues extend beyond mere logistics – it can likely also be attributed to a broader downturn affecting the entire EV sector.

The necessity for Tesla to repeatedly slash its prices in response to heightened competition, particularly in vital markets like China, highlights the struggle many EV brands are facing. That is, to thrive and stay ahead of the curve amid the growing market competitiveness

This is just one of the reasons why EV companies may be scaling back their ambitions, but the EV industry is likely also concerned about issues of demand as, whilst these vehicles remain appealing, they undoubtedly face challenges in capturing sustained consumer interest.

Factors such as expensive upfront costs, logistical constraints that come with needing to install a home charger, the ever-growing queues to charge and concerns about grid capacity, are enough to deter customers from investing in an EV.

Additionally, Tesla faces internal hurdles, including ongoing complaints about software reliability and safety, and investor unease about Elon Musk’s stagnation as his attention is diverted away to ventures like his social media company X (formerly Twitter) and SpaceX.