Tesla blames sales drop on Houthi attacks and arson in Germany

Tesla just turned in one of its more disappointing first quarters for deliveries in a while, and the company is putting some of the blame on an arson attack at its factory in Germany and shipping disruptions caused by Houthi attacks in the Red Sea.

Tesla said Tuesday that it delivered 386,810 vehicles in the first quarter of 2024, down 20% from the 484,507 it delivered in the final quarter of 2023. Crucially, Tesla shipped fewer cars than it did in the first quarter of 2023, meaning this was the first year-over-year drop in sales in three years.

Production was also down year-over-year, which Tesla attributed to switching to making the new Model 3, as well as the other disruptions. The arson attack shut down the Germany factory for nearly a week, and Tesla suspended production there for two weeks in January due to the problems in the Red Sea. The company’s stock fell more than 6% in early trading.

These drops come just two months after Tesla warned that sales growth could be “notably lower” in 2024 as it comes off a successful 2023 fueled by price cuts. The company claimed in January that it is “between two major growth waves” as it tries to ramp up production of the Cybertruck. It also has a lower-cost EV in the works, though plans for that have already shifted, and the company has said it is trying to create an all-new manufacturing process to get costs lower.

The company is facing increasing competition in China, too, where companies big and small are flooding the market with low-cost EVs. Bloomberg News reported last month that Tesla curtailed output at its Shanghai factory as a result of slower sales growth in the country.

Tesla tried to pull a few tricks at the end of the quarter to boost sales, as it usually does. The company promoted a one-month free trial of its advanced driver assistance software (which it calls Full Self-Driving, even though it does not make the cars autonomous). It also teased through much of March that it was hiking prices starting April 1.

This story has been updated to include more information about Tesla’s factory shutdowns.