(CNN) — Tesla became the world’s most valuable automaker by promising unprecedented sales growth. But, facing a surge in sales of electric vehicles from rival brands, Tesla fell short of its sales target on Wednesday.
Tesla has been cutting prices for more than a year to boost sales amid increasing competition. As a result, the company’s deliveries for 2023 increased by 38% compared to the previous year. Although this may seem like a big jump, the company has previously said it is aiming for an average 50% annual growth rate over several years.
This Wednesday it warned that in 2024 its “growth rate could be significantly lower than last year”. Tesla shares fell 7.5% in pre-market trading on Thursday.
For the first time in the fourth quarter, the company lost its lead in global electric vehicle sales to Chinese manufacturer BYD.
Tesla CEO Elon Musk told analysts on a call that Chinese automakers are “the most competitive auto companies in the world” and “they will have significant success outside of China.”
The comments come at a time when Warren Buffett-backed BYD has not only staked its claim but is also entering other markets. In December it committed to opening a factory in Hungary, its first passenger car production plant in Europe.
Increasing competition from BYD and other Chinese manufacturers has triggered an anti-dumping investigation by EU authorities that could lead to increased tariffs. Musk, who previously mocked Chinese electric vehicle brands, now believes they pose an existential threat.
“Frankly, I think if you don’t put up trade barriers, you will eliminate most of the car companies in the world,” Musk said.
Tesla’s 50% sales growth target has been a key factor in boosting the stock and making the company the most valuable automaker on the planet, even though it delivers far fewer vehicles than other big automakers. Established.
The company said its development pace would slow as “our teams work on the launch of the next generation vehicle.”
The next-generation vehicle, likely a lower-priced model, has not yet been revealed by the company and Tesla vehicles often face delays before reaching the market.
The company warned that the rollout of its most recent vehicle, the long-delayed Cybertruck pickup, which entered production in late 2023, “will take longer than other models given its manufacturing complexity.” Musk had said three months ago that it could take more than a year for the Cybertruck to become profitable for the company.
The new growth target comes amid a disappointing overall earnings report. Tesla reported adjusted earnings of 71 cents per share, less than the 74 cents per share expected by analysts surveyed by Refinitiv, but down 40% from a year earlier.
After a series of better-than-expected earnings reports at the start of 2021, this is the second consecutive quarter in which the company missed earnings forecasts.
Revenue for the quarter came in at $25.2 billion, up only 3% from a year earlier despite a large increase in deliveries, and indicating the impact of lower average selling prices in the wake of repeated price cuts. Revenue also came in below estimates at $25.6 billion. Shares fell 5% in after-hours trading.
Deeksha Madhok gave information.
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