NEW YORK: Tesla Inc on Sunday missed estimates for first-quarter deliveries as rising competition and a bleak economic outlook overshadowed the electric-vehicle maker’s efforts to prop up demand with price cuts.

Tesla deliveries were 36% higher than a year ago, but below the 52% growth rate that was projected by Chief Executive Elon Musk early this year.

Investors have been watching Musk’s gamble that cutting prices would stimulate sales, although they worry about eroding margins.

Tesla delivered 422,875 vehicles, a record high for the automaker but smaller than analyst expectations of 430,008 vehicles, according to Refinitiv data.

“If they wouldn’t have done the price cut, it would have been ugly. I think what it tells you is the economy is getting tough,” Gene Munster, managing partner at Deepwater Asset Management, said on Sunday.

“They showed an acceleration, but they didn’t accelerate to the level that Elon had suggested it would.”

Musk, who has missed his own ambitious sales targets for Tesla in recent years, said in January that 2023 deliveries could hit 2 million vehicles, absent external disruption, from 1.3 million in 2022. Tesla delivered 6% more of its mainstay Model 3/Model Y vehicles in the first three months of this year than in the previous quarter. But the number of deliveries for its higher-priced Model X/Model S vehicles slumped by 38%. The carmaker produced more cars than it delivered, manufacturing 440,808 vehicles for the first three months of this year.

The automaker ramped up production at new factories in Texas and Berlin, and as China production recovered from a COVID-19 lockdown hit.

MORE PRICE CUTS?

Some analysts expect Tesla may be pressured to lower prices further as many automakers have matched the cuts and concerns about a weakening economy persist.

Further clouding the demand outlook are US electric vehicle subsidies, which may fall on some models starting on April 18.

In January, Tesla slashed prices globally by as much as 20%, unleashing a price war after missing Wall Street delivery estimates for 2022.

Tesla’s cuts in China ignited a price war, with a number of Chinese rivals including BYD and Xpeng dropping prices to defend market share amid weakening demand.