Tesla’s sales showed a disastrous slump in the first quarter of 2024, with deliveries falling far below even the most pessimistic market estimates. Tesla reported just 386,810 vehicle deliveries, marking the company’s lowest sales quarter since the third quarter of 2022. The level of deliveries marked an 8.5% slump compared to the same quarter last year, and a whopping 20% nosedive from the previous quarter. Altogether, it’s the electric vehicle company’s biggest non-pandemic decline in over a decade.
In the wake of the official announcement of the shockingly low figures (the Wall Street consensus forecast expected 455,000 deliveries) Tesla's stock has slumped significantly, and shared are expected to “extend their 2024 slump past 33% [...] as analysts and investors rush to reprice the world's leading EV maker following its starkly disappointing first quarter delivery update,” according to recent reporting from TheStreet.
“This was really the beginning of the end of the Tesla bubble, which probably, arguably was the biggest stock market bubble in modern history,” says Peter Lekander, managing partner at investment management firm Clean Energy Transition. Lekander is a noted Tesla bear who has been shorting the company since 2020. “I actually think the company could go bust,” he added, speaking on “Squawk Box Europe.”
While Tesla points the finger at "factory shutdowns resulting from shipping diversions caused by the Red Sea conflict and an arson attack at Gigafactory Berlin" to explain the company’s disappointing performance, industry experts aren’t so sure about that explanation. And it’s true that these excuses can’t explain away the 46,000 unsold vehicles Tesla added to its inventory over the same timeline. According to Morgan Stanley analyst Adam Jonas, "the bigger factor is slowing demand."
But while Tesla’s EV sales have slumped disastrously, the company’s energy storage sales are humming along quite nicely. The company deployed 4,053 MWh of energy storage products in Q1, a record high for Tesla. Electrek reports that the Tesla Megafactory in Lathrop, California, where large format Megapack batteries are produced, has been observed “shipping out impressive numbers of battery packs.” The report goes on to detail that “over 440 Megapacks were spotted in the factory’s shipping yard” in early 2024, representing “over 1,700 MWh of energy storage ready to ship out.”
Indeed, the energy storage sector is growing at a healthy clip and is expected to explode in coming years. Meanwhile, global EV sales are slowing (but should not be counted out). Energy storage saw strong venture capital funding over the last year, even as total venture capital investments dropped by a whopping 30% across sectors, plummeting from $242.2 billion in 2022 to just $170.6 billion in 2023.
Overall, energy storage is on track to become an incredibly lucrative industry. According to law firm Morgan Lewis, energy storage is “the technology that will cash the checks written by the renewable energy industry.” The same report projects that keeping up with renewable energy growth will require 387 gigawatts (GW) of new energy storage capacity by 2030, around 15 times more than we have now.
However, this doesn’t mean that Tesla should drop its EV portfolio and pivot to full-time energy storage ventures. Energy storage is still a new and developing industry, and the kind of lithium-ion battery packs that Tesla makes will likely soon be upstaged by technological advances in long-term energy storage solutions. The reality is that eclectic vehicles and energy storage are both emerging sectors that are bound to face hiccups and contractions as the world struggles to decarbonize. A slump in either should not be misinterpreted as a harbinger of doom. But it is a good reason to diversify.
By Haley Zaremba for Oilprice.com
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