Balance of power. It might be hard to remember, but Tesla was supposed to become the market. The Cybertruck maker as recently as 2022 anticipated 50% annual growth in auto sales until reaching 20 million, twice as many as world-leader Toyota Motor. Those days are over, evidenced by figures released on Tuesday along with broader industry trends and Chief Executive Elon Musk’s behavior.

The $520 billion electric-car company has retaken the worldwide sales crown from China’s BYD, but that’s small consolation after a 9% decline in quarterly vehicle deliveries from a year earlier. At nearly 387,000, they also fell 15% short of what analysts had forecast.

There’s no silver lining either. The decline in customer deliveries is the first for Tesla since the pandemic struck in early 2020. Production also dropped for the first time since then. Constrained factories aren’t the problem: Tesla churned out roughly 12% more cars than it sold, the widest gap – again – in four years.

Some of this disappointment was inevitable. Displacing combustion-engines has been a tortuous task. U.S. electric-car growth flatlined at the end of 2023, according to Cox Automotive, while in China – another important market for Tesla – overall sales are also slowing.

Tesla’s share of the global market is in danger of shrinking, too. For now, its ageing lineup remains competitive. The base Model 3 is a rare electric car selling for less than $40,000 in the United States while peers are selling autos with dead-end charging technology. Both advantages will erode.

General Motors’ Chevrolet Equinox should be cost-competitive with, and run longer per charge than, the lowest-end Model 3. And rivals will roll out Tesla’s NACS ports in 2025. Worse, buyers might be looking for reasons to shop elsewhere. Musk’s public antics, including reposting conspiracy theories on social media, have coincided with Tesla’s sinking favorability among consumers.

The company’s equity value is close to where it was in late 2022 during a wider slump in stock prices. Squint, and it made sense at the time, if Tesla could sustain at least 15% operating profitability and sell 10 million vehicles. But it only moved 1.8 million of them last year and its margin is expected to slump to 9% this year, according to LSEG.

The market should eventually reaccelerate as fossil fuels are phased out, but for now interest-rate cuts essential for car loans are slow in coming. At 55 times forecast earnings for the coming year, investors can be forgiven any valuation range anxiety.

The $520 billion electric-car company has retaken the worldwide sales crown from China’s BYD.

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