Tesla has recently published a warning that sales growth for its electric vehicles would “notably lower” in the coming times of 2024. It might be significantly lower than last year as the company braced for customer demand in the market. With the lower consumer demand, it is also facing intensifying competition along with high interest rates damping the effect of a series of price cuts. Tesla told its investors in an earnings report on Wednesday that it was “between two major growth waves”. Chief Executive Elon Musk commented that the company is preparing to start production of the new lower-cost car in the second half of 2025. It would be 5 years after the first mooted plans to do so. The initial plan includes using “revolutionary manufacturing technology” that would lower the cost of the model.
The EV maker has now warned its shareholders in a letter that “in 2024, our vehicle volume growth rate may be notably lower than the growth rate achieved in 2023, as our teams work on the launch of the next-generation vehicle” at its Texas factory. After years of massive and rapid growth, Tesla’s latest earnings showcase concerns about the stalling global demand for electric vehicles. Especially now that the maker has started a new era of lower sales growth and margins. As a result, the shares fell more than 5 percent in after-market trading. In a call with investors and analysts, Musk said, “We don’t have a crystal ball so it’s difficult to predict with precision.” “If interest rates come down quickly margins will be good and if they don’t, they won’t be that good,” he added.
Tesla also reported a shrinking gross margin and slower revenue growth for the last three months of the past year, leading up to December. According to reports, the revenue was up 3 percent to $25.2bn, which marked its slowest pace of growth in more than three years. The earning reports also indicate that the company came in below the analyst expectations of $25.6bn. According to Tesla, the company has hit its target of delivering 1.8mn cars in 2023. However, unusually did not offer a specific delivery target for this year. Now Wall Street has predicted that Tesla will sell around 2.2mn vehicles in 2024 which would be an increase of about 20 percent, yet far lower than the 50 percent annual growth rate that the company pledged three years ago.
Electronic Vehicles have continued to rise to record levels in the international market, but at slower rates than expected. This is due to mass-market customers hesitating and comparing the prices with their petrol alternatives. This affected many EV makers that have recently scaled back on expansion plans. This number includes Ford and General Motors which have cut back on their expansion plans for the vehicles while rental group Hertz is now selling one-third of its electric fleet to buy more petrol vehicles.
However, at the same time, the competition is heating up where China’s BYD overtook Tesla as the world’s top electric vehicle manufacturer in the fourth quarter of 2023. BYD delivered 1.58 million fully electric cars last year.
