It's been a very trying first quarter for Tesla (TSLA) shareholders and fans of the EV giant.

Through Thursday, the last trading day of the first quarter, Tesla stock is down a whopping 29.3%, making it the worst-performing stock in the S&P 500 (^GSPC). Meanwhile, the S&P 500 is actually up 10.2%, its best first quarter since 2019.

For Tesla, a combination of poor guidance, a tough selling environment in China, and more drama from CEO Elon Musk led the EV maker, which topped $750 billion in market cap to start the year, to shed over $200 billion of that since Jan. 1.

Here’s how it all went down.

A warning to start the quarter

The first quarter started off fine for Tesla, when the EV juggernaut reported Q4 deliveries hit a record 485K, with its full-year 2023 total of 1.8 million also meeting estimates.

But that may be the high-water mark for Tesla, at least for the time being.

In its Q4 earnings report released in late January, Tesla said its "vehicle volume growth rate may be notably lower than the growth rate achieved in 2023," indicating it would not reach Street estimates of 2.19 million for 2024. Tesla also saw its automotive profit margin dip following steep price cuts.

Morgan Stanley’s Adam Jonas, one of the biggest Tesla bulls on Wall Street, was not impressed by the lowered guidance and the lack of real commentary given to explain it. “I still struggle to think of another company which provided such scant level of details on the forward-year outlook,” Jonas said in a note to investors. “Our team is left with the impression that either (a) visibility is poor or (b) there are downside risks in the broader EV market outside of Tesla’s control.”

Part of that forward guidance, at least in the long term, revolved around Tesla’s yet-to-be-named next-generation vehicle, which Tesla said would impact growth. Though Tesla said its plan is to get the vehicle to market as soon as possible, with production slated for Giga Austin, Tesla revealed the vehicle would only hit production in the second half of 2025.

Tesla has blown its own external timelines in the past — for example, the Cybertruck debuted in 2019 but only went into production in Q4 of last year. Many people are concerned the next-gen vehicle, which could potentially unlock large growth and margin gains, won’t come soon enough.

China concerns growing

Tesla’s troubles in China began almost immediately in the new year.

In early January, Tesla announced steep price cuts for its cheapest models in the country, with the Model 3 price dropping by 5.9% and the Model Y by 2.8%. This was a repeat of what happened the prior year, when Tesla and Chinese rivals like BYD, Li Auto, and XPeng engaged in a price war that even alarmed the Chinese government.

But price cuts didn’t seem to help sales improve compared to a year ago. Tesla reported 60,365 vehicle shipments from its Giga Shanghai factory in February, according to China’s Passenger Car Association. The February shipments represent a 19% drop from a year ago and the lowest shipment total since December 2022.

The situation did not improve in March either. “While NEVs [New Energy Vehicles, such as EVs and plug-ins] specifically were up 39.6% YoY and up 7.4% [week over week for March 17],” Deutsche Bank’s Emmanuel Rosner said in a note to clients, “Tesla was down 35% YoY and down 8% WoW.”

With sales clearly slipping, Tesla reportedly decided its ultraefficient Giga Shanghai factory would produce fewer vehicles. Last week, sources told Bloomberg that Tesla cut production at the plant by having employees work five days instead of the usual six and a half.

“Tesla’s Shanghai plant, at its peak, was producing at a rate of more than 1 million units a year and the local market couldn’t absorb all of that,” auto manufacturing expert Sam Fiorani of AutoForecast Solutions told Yahoo Finance. “Exports took up some of the excess, but reducing output by as much as 20% will help to align supply and demand.”

Musk threatens Tesla for more pay and control

If poor guidance, lack of clarity, and trouble in China weren't enough, CEO Elon Musk’s antics during the quarter did not help.

Case in point was Musk’s comments on artificial intelligence. Musk warned in mid-January that he would need to secure greater control of Tesla if the company's wide-reaching AI ambitions are going to be met.

"I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control. Enough to be influential, but not so much that I can’t be overturned," Musk said from his X account. "Unless that is the case, I would prefer to build products outside of Tesla."

Tesla stock fell after those comments, with investors concerned Musk may hive off Tesla’s AI unit into a separate entity. Plus, Musk was essentially demanding a king’s ransom for keeping AI operations as is.

"The Street views Tesla correctly (in our view) as a disruptive tech leader, and if Musk ultimately went down the path to create his own company (separate from Tesla) for his next generation AI projects this would clearly be a big negative for the Tesla story,” Wedbush analyst Dan Ives wrote in a note at the time.

Part and parcel to this demand for more stock is the ongoing litigation surrounding Musk’s current $56 billion pay package, awarded to him by the Tesla board in 2018. The CEO's pay package, which covered 10 years, gave him stock grants worth around 1% of Tesla's equity each time the company achieved one of 12 milestones — essentially whenever Tesla's market value rose by $50 billion.

In late January, a Delaware judge invalidated Musk’s pay package, finding that Tesla's directors had breached their fiduciary duty when they awarded Musk the largest compensation ever granted to an executive at a public company.

"Investors in Tesla will need to consider if the Tesla board can fulfill its fiduciary responsibilities if it is beholden to its CEO over the general interest of shareholders," said William Klepper, corporate governance expert and adjunct professor at Columbia Business School.

Tesla investors will be watching next week's Q1 delivery report, hoping an upside surprise can shake off a miserable quarter.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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