The highly anticipated third quarter delivery report from Tesla (NASDAQ:TSLA) was released this morning and investors were disappointed. Tesla’s electric vehicle (EV) deliveries were 6.5% lower in the first half of this year than in 2023. Investors expected growth to resume in the third quarter.

While the results showed Tesla’s electric vehicle deliveries increased year-over-year, investors still pushed the stock down as much as 5.5% on Wednesday morning. As of 11:25 a.m. ET, Tesla shares were still trading 3.6% lower. The negative reaction was partly because Tesla shares were already up about 20% in the last month. But there was more to the story.

Tesla is feeling headwinds from two directions

In today’s publication, only the company’s production and delivery results were shown. But investors were also nervous as increasing competition and resulting price wars squeezed the electric vehicle leader’s profit margin this year. Investors will have to wait until October 23 for Tesla’s full third-quarter financial update.

But while shipments are up more than 6% year-over-year, investors are noticing that competitors are also seeing strong sales increases. Several Chinese electric vehicle manufacturers reported record September deliveries yesterday General Motors just reported a nearly 60% year-over-year increase in its electric vehicle sales in the third quarter.

It looks like the competition is starting to take significant market share from Tesla. Although the overall electric vehicle market may return to stronger growth, gains are likely to remain elusive due to ongoing pricing pressure.

However, Tesla is one of the few global electric vehicle manufacturers that actually makes a profit from its products. One possible piece of good news from Tesla’s report concerned vehicle production. While shipments increased by about 6%, production increased by over 9%. If these vehicles already have buyers and just haven’t been delivered yet, Tesla could be giving investors a promising outlook for the fourth quarter.

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Howard Smith holds positions at Tesla. The Motley Fool has positions in Tesla and recommends them. The Motley Fool recommends General Motors and recommends the following options: Long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.

Why Tesla Stock Sank Today was originally published by The Motley Fool