Even though Tesla's sales grew at a fast rate, it wasn't fast enough for the company to keep its promise to increase deliveries by about 50% per year.

Tesla's sales of cars went up by 36% in the first quarter after the company cut prices twice to boost demand.

The company that makes electric cars, SUVs, and heavy trucks said it delivered 422,875 vehicles around the world from January to March. This is up from just over 310,000 vehicles a year ago. FactSet says that analysts thought the increase would be 432,000 for the quarter, so the number wasn't quite right. The company set a new record for sales in the first quarter.


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Early in March, Tesla cut the prices of its more expensive S and X models by $5,000 to as much as $10,000. It lowered the sticker prices on some of its electric vehicles (EVs) in January, which made some of them eligible for a $7,500 federal tax credit in the United States. Some versions of the best-selling small SUV Model Y got price cuts of almost 20%, and the base price of the small Model 3 car went down by 6%.

Even though interest rates went up to slow the economy and stop inflation, the price cuts seemed to have increased demand. Since the US Federal Reserve started raising interest rates in March of last year, the average loan for a new car has gone from 4.5% to 7%.

Analysts are watching to see if the price drops hurt the company's profit and margins per vehicle. Tesla says that it will announce its first-quarter earnings on April 19 after the markets close.

The company in Austin, Texas, said it sold 412,180 Model Ys and Model 3s in the third quarter. This is almost 40 percent more than the 295,324 cars it sold in the same time last year.

But sales of the Model X large SUV and Model S large sedan, both of which are getting old, dropped by almost 38 percent, to 10,695.

When Tesla cut its prices, some analysts wondered if it meant that people were buying fewer cars. Others said the company was using its higher profit margins to try to take market share from newer companies and established automakers that are starting to sell more electric vehicles. Some analysts said that this would be the start of a big price war, but that hasn't happened yet, at least in the US.

Even though Tesla's sales growth was good, it was slower than what was needed for the company to keep its promise to increase deliveries by about 50% per year for the foreseeable future.

During the first quarter, Tesla made more cars than it sold. It made 440,808 cars as production ramped up at new factories near Austin, Berlin, and Shanghai.

Affordability is still a big problem.

Philippe Houchois, an analyst at Jefferies, said in a note to investors on Sunday that Tesla's "excess production over deliveries" will keep people talking about whether demand is weak or if price cuts will boost demand.

During an event for investors in early March, Tesla CEO Elon Musk said that the price of the cars is still a problem, but that many people still want to buy a Tesla.

"Their ability to pay for a Tesla is the only thing stopping them," he said.

The Model Y, which is the most popular car, starts at $54,990, while the Model 3 starts at $42,990. The Model S starts at $89,990, and the Model X starts at $99,990.

US safety regulators are also paying more attention to Tesla. 

They have opened multiple investigations and forced the company to recall its "Full Self-Driving" software because it behaves in a dangerous way. The National Highway Traffic Safety Administration is looking into Tesla because its steering wheels can come off, its seat belts might not hold people in a crash, and its partially automated systems can crash into parked emergency vehicles or stop for no reason.

SOURCE: NEWS AGENCIES