What Tesla’s Troubles Signal for the Electric Vehicle Market

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The carmaker’s disappointing results point to slowing demand and a “sharp deterioration in growth” that extends beyond Elon Musk’s company.

Elon Musk, Tesla’s C.E.O., prepares to exit a Tesla automobile, dressed in a dark suit.
Elon Musk, Tesla’s C.E.O., had warned of tough times for the E.V. sector. The company’s results yesterday underscore the industry’s challenges.Tingshu Wang/Reuters

Wall Street has sounded the alarm for weeks that the transition to electric vehicles may be stalling, despite billions in government subsidies and huge investments by auto giants.

Tesla’s latest sales figures suggest that the pullback may be worse than thought — and beyond one company’s ability to fix.

Tesla’s numbers undershot forecasts. The car maker’s stock fell nearly 5 percent on Tuesday after it reported deliveries of 387,000 cars worldwide in the first quarter — the Evercore ISI estimate was 443,000 — in its first year-on-year quarterly decline since 2020.

That has contributed to a more than 30 percent decline in Tesla’s stock, which has made it one of the worst performers on the S&P 500 this year.

Tesla had warned of “notably lower” growth this year. The company has faced setbacks including a suspected arson attack on its German gigafactory and shipping delays tied to the turmoil in the Red Sea. Meanwhile, high interest rates and the rise of cheaper Chinese E.V.s are sapping global demand and eating into Tesla’s once dominant market share.

Some Elon Musk critics — including Ross Gerber, an outspoken Tesla investor — laid the blame squarely on the company’s C.E.O., saying that his “toxic behavior” had “ absolutely damaged the brand.” (Musk has said little about the Tesla numbers, except to call Gerber “ an idiot,” and to note “it was a tough quarter” for all E.V. makers.)

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