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Tesla is expected to report lower delivery numbers for the first quarter of 2024 next week. The initial boost it saw when it first cut prices seems to be wearing off, and the company is up against intense competition in an EV market that's showing signs of an overall slowdown.

After revolutionizing the auto industry with its rapid growth, Tesla is now experiencing a slowdown as the attraction of its EVs wanes, and the lack of any real updates to its model range may also be adding to its predicament. The rise of affordable vehicles from its competitors, especially China, the largest market for automobiles globally, coupled with higher interest rates, have added to Tesla's headwinds.

Analysts suggest that Tesla buyers may also be experiencing "price-cut fatigue," a situation that's testing the company's profitability. "

Teslas has been one of the worst performers on the S&P 500 so far this year, with the value of its shares plummeting by nearly 30%.

Early predictions are that the company will deliver a total of 458000 vehicles in the first quarter of 2024, which is slightly more than the same period last year but 5% down on the previous quarter.

Tesla's strategy of aggressive price cuts did positively impact sales for a while but also frustrated existing owners who saw the value of their vehicles diminished by the cuts in the new car prices.

Tesla boss Elon Musk defended the cuts as a necessary move to stimulate sales amid reduced demand and keep the factory running and attributed the present challenges to seasonal effects and higher borrowing costs.

Despite the company's efforts and aggressive price cuts, questions are being asked about the long-term viability of such a strategy for durable consumer goods like vehicles, particularly in key markets such as the U.S., China, and Germany.

Tesla's adjustment to a slower growth environment comes amid a fierce pricing battle in China, a market that has proven challenging for many automakers. This competition saw Tesla lose its top EV maker title to BYD in the fourth quarter, reflecting the intense competition in the area.

Furthermore, Tesla's deliveries in China have seen a fall in the first few months of 2024, dropping by 6.2% year-on-year. In the U.S., some Tesla models have been ineligible for federal tax credits due to limitations on sourcing battery materials from China, pushing some consumers towards cheaper hybrid vehicles.

Tesla's production facilities have also faced issues, including shutdowns at its German plant, though these disruptions are not expected to meaningfully affect overall delivery figures. The Berlin factory came to a temporary halt because a shipping crisis affected parts supplies, and an arson attack on a nearby electricity pylon caused another pause.

As Tesla prepares to issue the numbers reflecting its first-quarter deliveries, the focus will be on how the company progresses through these challenges. With the EV market evolving rapidly, how Tesla responds will be key to maintaining its dominant position in the EV sector.