In the first quarter, of 2024, Tesla experienced an 8.5 percent drop in global deliveries, totalling 386,810 vehicles. The decline can be attributed to heightened competition and a decrease in demand for electric vehicles in key markets, especially in China where Chinese EV manufacturers are engaged in aggressive price wars with one another.

Tesla explained in a statement on Tuesday that the decrease in volumes was partly due to the initial phase of production ramp-up for the updated Model 3 at their Fremont factory, as well as factory shutdowns resulting from shipping diversions caused by the Red Sea conflict and an arson attack at Gigafactory Berlin.

Tesla manufactured 433,371 vehicles during the January-March period. However, the first quarterly decline in deliveries in four years also signals that the impact of its price reductions is diminishing. Forecast for the year ahead suggests a more challenging landscape ahead.

Industry analysts caution that Tesla’s growth may plateau this year, influenced by a cooling electric vehicle market in the U.S. and intensified competition worldwide. In January, Tesla CEO Elon Musk stated that the anticipated next wave of growth will coincide with the launch of Tesla’s new low-cost model in 2025.

Tesla will increase production of the Cybertruck in the US in response to strong demand. However, Musk stated in late 2023 that full-volume production of the stainless-steel truck is expected to commence in 2025.