Why has Tesla stock tanked over 33% in 3 months? Here are 4 key reasons

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The Tesla stock price has plummeted by more than 33 per cent in calendar year 2024 (CY24) to around $170 levels now, marking the electric vehicle giant as the worst performer in the Nasdaq 100 Index and the second worst in the S&P 500 Index.

Technical analysts suggest that the stock has support at $150 levels. A fall below that, they said, can take the counter down further.

Here’s what has triggered the fall in Tesla’s stock price in the last three months:

Sales update

Tesla shares tumbled on Tuesday after the company reported a decline in sales. Tesla sold approximately 387,000 vehicles in the first quarter of CY24 (January – March 2024), representing a 20 per cent decrease from the previous quarter and an 8.5 per cent drop from the previous year. It marked the company’s first annual decline since the Covid-19 pandemic hit in early 2020.

Analysts had expected deliveries of around 457,000 for the period ending March 31. Estimates ranged from a high of 511,000 deliveries to a low of 414,000 for the first quarter, with estimates updated in March ranging from 414,000 to 469,000 deliveries, reports suggest.

Although analysts had anticipated a challenging Q1, the figures were an 'unmitigated disaster', some analysts were reported saying.

Component supplies

The EV maker attributed the decline in volumes to the early phase of the production ramp-up of the updated Model 3 at its Fremont, California factory. That apart, Houthi militia attacks on shippers in the Red Sea had disrupted Tesla’s component supply and temporarily suspended production at its German factory outside of Berlin in January. 

In March, environmental activists set fire to infrastructure near the same factory, depriving Tesla of sufficient operational power and causing another pause in production. This, analysts believe, impacted the overall sales volume in the recently concluded quarter.

Rising competition and sluggish EV demand

Even before the sales numbers were unveiled, traders were aggressively selling off Tesla stock. The sell-off was attributed by analysts to a cooling-off in the electric vehicle (EV) market amid heightened competition from global players like Chinese electric-vehicle maker BYD, prompting Tesla to announce a series of price cuts to boost demand.

In January 2023, Tesla slashed prices globally on its electric vehicles by as much as 20 per cent, extending an aggressive discounting effort and challenging rivals after missing Wall Street delivery estimates for 2022

Later in March, it briefly reduced the price of its top-selling vehicle, the Model Y, by USD 1,000. These price reductions resulted in a narrowing of the company's profit margins and unsettled investors.

Consumer sentiment

The ranks of ‘would-be Tesla buyers’ in the United States are shrinking, according to a survey by market intelligence firm Caliber, which attributed the drop in part to CEO Elon Musk's polarising persona.

Caliber's "consideration score" for Tesla fell to 31 per cent in February, less than half its high of 70 per cent in November 2021 when it started tracking consumer interest in the brand.

Tesla's consideration score fell 8 percentage points from January alone, even as Caliber's scores for Mercedes, BMW, and Audi, which produce gas as well as EV models, inched up during the same period, reaching 44-47 per cent.

Watch: 4 Reasons why Tesla shares are falling since January 2024