New York
CNN
 — 

Tesla reported a modest 4% rise in sales in the first quarter compared to the final three months of last year, despite a series of price cuts on its lower priced vehicles and talk by CEO Elon Musk about strong demand at those lower prices.

The first quarter also marked the fourth straight quarter that Tesla has produced more vehicles than it has delivered to customers. Some of that may be due to the ramp up in production at two new factories, one in Texas, the other in Germany, which opened last spring, and a lag between that increased production and sales.

Tesla said there was an increase in the number of its more expensive models, the Model S and Model X, in transit to Europe, the Middle East and Africa, as well as to the Asia Pacific region.

But it does mean that over the last 12 months Tesla has produced 78,000 more cars than it has sold, suggesting that talk of strong demand by Tesla executives may not be backed up by the numbers.

“Early this year, we had a price adjustment. After that, we actually generated a huge demand, more than we can produce, really,” said Tom Zhu, Tesla’s executive in charge of global production and sales. “And as Elon said, as long as you offer a product with value at affordable price, you don’t have to worry about demand.”

The company reported it completed sales of 422,875 vehicles in the quarter. That’s short of the forecast of 430,000 vehicles from analysts surveyed by Refinitiv. But Dan Ives, tech analyst for Wedbush Securities, said the consensus that Wall Street was looking for was deliveries of 421,500, which would mean a very narrow beat for Tesla.

Even Ives, a bull on Tesla stock, said the lower prices that Tesla got for cars in the quarter will mean tighter profit margins going forward. Tesla will report full first quarter financial results on April 19.

“The big question will be margins as cutting prices will have an impact on this front,” he said in a note to clients Sunday.

First quarter production was up only 0.2% from the final three months of 2022, despite it efforts to ramp up production in Germany and Texas.

Production and sales were up much more when compared to the first quarter of 2022, with production up 44% and deliveries up 36%. But even that suggests that Tesla is below the 50% annual growth target it has set for the company long term.

Shares of Tesla

(TSLA), which fell 65% in 2022 for its worst annual performance ever, closed Friday up 68% so far in 2023. Still that left shares off 41% from where they stood at the end of 2021.