Shares of Tesla fell over 10 percent on Thursday as the company disappointed investors on Model 3 deliveries, which fell below expectations and hurt exchange-traded funds (ETFs) with the largest holdings of the electric carmaker.

ETFs with the heaviest weightings in Tesla were affected, such as the VanEck Vectors Global Alt Energy ETF (NYSEArca: GEX)–down 0.43 percent and the ARK Industrial Innovation ETF (NYSEArca: ARKQ)–down 1.26 percent.

“Tesla continues to struggle as a ‘real car company,’ with demand collapsing for the tired Model S/X platforms and higher priced versions of the Model 3,” Cowen analyst Jeff Osborn said in a note Thursday.

Tesla announced late Wednesday that it delivered 63,000 cars, which below analysts’ expectations of 76,000 deliveries. The company’s deliveries of the Model 3 midsize sedan were 50,900, which also fell below a FactSet estimate of 52,450.

Overall, Tesla said it produced 77,100 cars during the first quarter.

“This was a disappointing performance by Tesla, although the key Model 3 number was within the area code of Street expectations…The overall deliveries missed Street expectations, the all-important Model 3 deliveries were above whisper expectations and exceeded 50k this quarter which will be the focus of many bulls on the Street,” said Wedbush analyst Dan Ives. “That said, European and Chinese deliveries hit anticipated delivery logistics and were the main culprit for the overall miss which was disappointing to see and resulted in a soft quarter with profitability in the red for Musk & Co.”

To other analysts, the fall during the first quarter was expected as buyers of electric vehicles lost federal tax credits, which translates to a loss in sales.

“We do not find this slowdown in U.S. demand to be totally surprising or alarming,” Bernstein analyst Toni Sacconaghi told investors in a research note.

Related: Earnings Tests Loom for Leveraged Retail ETF ‘RETL’

Q2 Optimism

Last month, CEO Elon Musk said Tesla would not be able to produce a profit in the first quarter of 2019. Despite the negative outlook for profitability in the first quarter, Musk was more optimistic about the company churning a profit in the second quarter.

“Given that there is a lot happening in Q1, and we are taking a lot of one time charges, and there are a lot of challenges getting cars to China and Europe, we do not expect to be profitable in Q1,” Musk said during a call with reporters on Thursday evening. “We do think that profitability in Q2 is likely.”

With the phasing out of its physical dealerships, the automaker is looking to use online sales as its primary driver.

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