• Record High Deliveries
• BYD Overtakes Tesla
• Tesla’s Bumpy Road

Record High Deliveries

In 2023, Tesla achieved significant sales, exceeding the estimated 1.8 million vehicles, a notable accomplishment under Elon Musk’s leadership. This achievement can be attributed to strategic price cuts designed to stimulate demand in an increasingly competitive electric vehicle (EV) market.

Tesla’s sales showed a 38% increase in 2023 compared to the previous year, indicating a slight deceleration in its growth rate. The company is now navigating a more competitive environment characterized by measured expansion and reduced profit margins.

Despite reaching this impressive milestone, Tesla’s CEO had ambitiously hinted at a target of 2.0 million sales last year, a goal that remained unmet.

Nevertheless, over the past 16 years, Tesla has sold close to 5.5 million electric vehicles, a testament to the significant impact that the company had in the EV market.

Source: ir.tesla.com

During the latest quarter, the EV automaker smashed its previous record of 466k deliveries by handing over 485k EVs to its loyal customers.

Moreover, the company has finally begun delivering its long-awaited Cybertruck to its ecstatic customers.

Source: brandude87 & Tesla IR (Reddit)

BYD Overtakes Tesla

This month marked a milestone for the Chinese vehicle manufacturer BYD, which surpassed Tesla’s Q4 sales for the first time. BYD sold 526k battery-only electric vehicles, outperforming Tesla’s Q4 sales of 485k in 2023.

Source: Bloomberg

On an annual basis, BYD recorded a growth rate of 70% Year-over-Year, selling nearly 1.6 million battery-powered vehicles compared to 1.81 million by its competitor Tesla.

This intense rivalry has caused Tesla to slash prices in China to boost the demand for its products.

Tesla revealed new pricing for its Model 3 sedan and Model Y SUV, with the Model 3 seeing a 5.9% cut to $34,600, while the Model Y got a 2.8% discount to $36,400.

Tesla’s Bumpy Road

Tesla (TSLA) intends to suspend operations at its primary European facility in Berlin for a fortnight due to a shortage of components. This move indicates the beginning of the global economic impact resulting from the recent assaults on vessels in the Red Sea.

Tesla announced that it will cease most of its production activities at its plant near Berlin from January 29 to February 11 due to a component shortage. The company plans to resume production on February 12.

To add to the challenges Tesla’s investors face, the company is set to increase the salaries of its entire US workforce. Consequently, Tesla’s profit margins are expected to suffer further due to rising operating expenses.

Also, Tesla has recalled 1.6 million cars in China due to technical issues with its driver assistance to fix autopilot issues, in a similar move to the one they did in the US last month. The recall in the United States occurred during an extensive investigation by the leading automotive safety authority into accidents involving driver-assist systems over several years.

Lastly, Hertz, a rental company, is offloading approximately 20k electric vehicles, including Teslas, from its U.S. fleet. This move comes roughly two years after the firm’s agreement with the automaker to provide its vehicles for rental, indicating a downturn in the demand for electric vehicles.

All the price cuts have also hit Tesla’s gross margins (GM) to boost the demand for its products.

Source: Company Data

Look at how, steadily, Tesla’s GM has been shrinking and even falling behind competitors Toyota and VW, halving from 34% to 16% in two years.

Are margins ready to bounce off in a big way, especially given that the most anticipated recession is yet to materialize in the US? And what will drive earnings growth for Tesla?

Those questions will probably be addressed in the next major company update on 24-Jan-2024 when Tesla releases its Q4’2023 earnings!

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