Tesla is poised to score another record quarter for electric vehicle (EV) deliveries, falling short of CEO Elon Musk’s lofty 2 million annual internal goal set at the start of the year.
Faced with falling sales, Tesla used its industry-leading margins to lower prices on its four vehicle models internationally in 2023, with an emphasis on China, where it has lost market share to locals like BYD.
However, the pricing battle and decreasing EV demand have caused manufacturers such as Ford Motor to scale back their electrification aspirations, leaving Tesla as the unchallenged leader in the US and helping its stock more than double this year.
“The fourth quarter is typically Tesla’s strongest quarter in terms of deliveries, and we expect that to continue this year,” said Garrett Nelson, senior analyst at CFRA Research.
According to 14 experts surveyed by LSEG, Tesla is expected to produce 1.82 million cars worldwide in 2023, up 37% from 2022, with around 473,000 units delivered in the fourth quarter.
Musk said in January that Tesla can deliver 2 million vehicles this year if “freaking force majeure” does not occur. However, as late as October, he cautioned that rising borrowing prices were putting a damper on demand.
The firm, which increased prices on its core models as a year-end sales drive, has said that it hopes to attain a 50% average annual growth rate over several years.
In 2024, the EV market leader will face the loss of federal tax credits for certain of its vehicles in the United States, as well as in Germany, where the government is prematurely terminating its EV subsidy program.
Even if borrowing rates and battery component prices are likely to fall next year, this may compel greater price reductions.
Daiwa Capital Markets analyst Jairam Nathan reduced his forecast for Tesla deliveries next year to 2.04 million from 2.14 million and predicted a 4% fall in average revenue per vehicle starting in 2023.
CHALLENGES FOR 2024
In addition, the corporation is contending with increased regulatory scrutiny of its self-driving systems and other components in the United States and several European nations. Tesla recalled almost all of its 2 million cars on US roads earlier this month to install additional safety.
Musk has previously said that he expects full self-driving (FSD) vehicles would one day account for the majority of Tesla’s worth.
According to Visible Alpha surveyed analysts, Tesla will produce 2.2 million vehicles next year. Most people feel that the recently announced Cybertruck and a redesigned Model 3 will not be enough to increase demand.
“Tesla candidly admitted the company is now in an intermediate low-growth period,” Emmanuel Rosner of Deutsche Bank said in a report, citing a meeting with Investor Relations Chief Martin Viecha.
Investors anticipate that Tesla’s margins will continue under pressure as the firm speeds up Cybertruck manufacturing and prepares to unveil a lower-cost vehicle platform.
Musk has said that Cybertrucks would account for a tiny fraction of the cars produced by Tesla next year and that there will be “enormous challenges” in achieving scale production for the pickup, whose contentious design has split enthusiasts.
According to Tom Narayan, an analyst at RBC Capital Markets, Cybertruck will represent 3% of Tesla’s sales in 2024, making it more of a “halo” product that might draw customers to the brand.
