Tesla sales rose in the last three months of 2023, after the carmaker cut prices and customers rushed to take advantage of tax incentives for electric vehicles — something that will be hard to come by in 2024.
Company said on Tuesday It sold 484,500 cars in the fourth quarter, compared to 435,000 in the third quarter and 405,000 in the fourth quarter of 2022. Tesla sold 1.8 million vehicles for the full year. These gains put Tesla on track to sell more than two million cars by 2024, overtaking established carmakers such as Mercedes-Benz and Renault.
A rebound in sales in the fourth quarter should help calm investor concerns about whether Tesla can maintain its dominance in the market for electric vehicles in the face of increasing competition from traditional carmakers.
In the past year, Tesla has lost market share to rivals such as General Motors, Hyundai, Ford Motor and Volkswagen as they introduced more electric vehicles. Tesla accounts for half of the electric cars sold in the US. By 2022, Tesla will have two-thirds of the market.
Rivian, another electric vehicle maker, said on Tuesday it sold nearly 14,000 vehicles in the last three months of the year. That number is up significantly from a year ago, but down about 10 percent from the third quarter.
In China, the largest market for electric cars, Tesla faces stiff competition from BYD and other Chinese automakers. BYD sold 526,000 fully electric cars worldwide in the fourth quarter, surpassing Tesla, a milestone many auto analysts had hoped for given the Chinese company's rapid growth.
Chinese automakers have moved quickly to offer a wide range of affordable electric models as the market expands beyond early adopters of the technology. They are the main customers who have bought Teslas for as long as the company has existed.
“Customers buying EVs now are second-time adopters with fundamentally different needs,” said Shai Natarajan, a partner at Mobility Impact Partners, a private equity fund focused on investing in sustainable transportation. “They care about tangible and immediately tangible decreases in total cost of ownership, and they care about convenience.”
In Europe, Volkswagen and its Audi and Skoda divisions sell more electric vehicles than Tesla, although the Tesla Model Y remains the best-selling model on the continent, according to data compiled by Schmidt Automotive Research.
In the United States, those interested in buying an electric car had a strong incentive to take delivery by the end of the year because of new rules aimed at cutting China out of the supply chain.
Tesla has warned on its website that the two lowest-priced versions of its Model 3 sedan will no longer qualify for $7,500 in federal tax credits after Dec. 31. These cars have batteries made in China. Germany and some European countries have also withdrawn subsidies for electric vehicle buyers.
To keep up sales, Tesla slashed prices, listing Model 3s on its website for less than $30,000, factoring in tax credits. By late December, the number of low-cost cars listed on the website appeared to have dropped, indicating that the strategy was successful. But the price cuts cut into Tesla profits, which fell 44 percent in the third quarter from a year earlier.
Tesla said it will announce earnings for the fourth quarter of 2023 on January 24.
While fewer Teslas will qualify for federal tax credits in 2024, the company is in a better position than most of its competitors. All versions of the Model Y sport utility vehicle, including a performance version of the Model 3 that includes upgraded wheels and brakes, will be eligible for the subsidy. A central government website. Tesla manufactures the batteries for those cars at a Nevada plant operated by Panasonic, allowing it to meet domestic production needs.
That gives Tesla a significant advantage over rivals like Ford, which has said its Mustang Mach-E sport utility vehicle won't qualify for the credit in the new year.
Ford and other companies rely on manufacturers in China for critical components. Ford is building battery factories in the U.S., but they won't start production until 2025.
General Motors has been making batteries at a new factory in Ohio, but has struggled to keep the plant running at full capacity. GM said in December that initially only the Chevrolet Bolt would qualify for the tax breaks. The Cadillac Lyric and electric Chevrolet Blazer no longer qualify.
GM has said it will adjust its supply chain so that those and other vehicles, including electric versions of the Chevrolet Silverado pickup and Equinox sport utility vehicle, will be eligible by early this year.
Tesla and other carmakers could also benefit from lower interest rates in the new year. Investors are betting that the Federal Reserve and other central banks will start cutting rates as inflation cools.
