Tesla's annual sales fall short of expectations, raising questions about future growth

Tesla reported its first year-over-year decline in annual sales since 2015 on January 2, as the company faced challenges in meeting its sales targets. 

Despite offering promotions such as 0% financing, free charging, and low-priced leases, Tesla handed over fewer electric vehicles than expected in the fourth quarter, resulting in a slight dip in annual sales for 2023, Caliber.Az reports referencing foreign media sources.

In the fourth quarter of 2023, Tesla delivered 495,570 vehicles, which represented a 2.3% year-over-year increase. However, this was still short of Wall Street expectations, which had forecast 498,000 deliveries. For the full year, Tesla delivered 1.79 million vehicles, which was a 1.1% decline from the 1.81 million vehicles delivered in 2022.

The decline in overall demand for electric vehicles, especially in key markets like the US, China, and Europe, contributed to the slowdown.

Tesla's average sales price fell to just over $41,000 in the fourth quarter, marking the lowest in at least four years. This significant drop in prices raises concerns about Tesla’s future profit margins and earnings, which the company plans to announce on January 29. Despite these challenges, Tesla shares rose more than 50% over the past year, driven in part by the election of Donald Trump and investor expectations of potential regulatory relief for Tesla.

Tesla’s CEO Elon Musk had set an ambitious goal of 50% annual growth for Tesla, but competition from both legacy and startup automakers, coupled with an ageing model lineup, has made this goal increasingly difficult to achieve. Analysts note that early adopters of electric vehicles have already purchased them, and mainstream buyers remain concerned about price, range, and charging infrastructure.

In the fourth quarter, the majority of Tesla’s deliveries came from its more affordable Model 3 and Model Y, while the company only delivered 23,640 units of its more expensive models, including the Model X, Model S, and the new Cybertruck. The Cybertruck, which is expected to be a key part of Tesla’s future growth strategy, has shown signs of demand weakness, adding to investor concerns.

To address these challenges, Tesla plans to launch a new low-cost model in the first half of 2025, which could help boost sales and restore confidence. Additionally, Tesla continues to focus on expanding its self-driving technology and AI-driven autonomous vehicles, although these advancements are still years away from widespread deployment.

Tesla's global electric vehicle sales edged out Chinese rival BYD, which reported a 41% increase in sales, with 1.77 million EVs delivered in 2023. As competition between the two automakers intensifies, Tesla will need to rely on its existing lineup and future vehicle launches, such as the Cybertruck and new budget models, to maintain its position as a leader in the electric vehicle market.

By Tamilla Hasanova