Tesla Inc warned of weaker sales growth in 2024 as it creates its next-generation vehicle, a low-cost car that’s being made in its Austin factory.
The carmaker didn’t offer a specific, full-year delivery target on Wednesday, which is unusual. It’s long pegged its average annual growth at 50% over multiple years, which it nearly reached in 2023 after spending the year slashing prices across its lineup.
Analysts have warned Tesla probably can’t mark cars down much further. The company’s next-generation model won’t be ready for production until the second half of next year at the earliest, Chief Executive Officer Elon Musk said. Wall Street expect Tesla to sell 2.2 million vehicles in 2024, roughly 20% more than in 2023.
“Tesla is currently between two major growth waves,” Musk said on a call with investors.
The automaker also reported earnings of 71 cents a share in the fourth quarter of last year, missing the 73-cents-a-share average estimate. Tesla generated US$25.2 billion in revenue, less than the US$25.9 billion predicted by Wall Street.
The company’s shares fell as much as 5.9% in post-market trading. The stock was down 5.1% at 6:34 p.m. in New York.
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Tesla’s next-generation vehicle has been long in the works. Musk once spoke of a US$25,000 Tesla model, which would allow it to push further into the mass market, though the vehicle has yet to materialize. The CEO said Wednesday’s call wasn’t a “product announcement,” but added that the next-generation car would likely be made Austin and a yet-to-be-built site in Mexico, along with a third location outside North America.
“That will be a challenging production ramp,” Musk said. “Once it’s going, it will be head and shoulders above any other manufacturing technology that exists anywhere in the world. It’s next level.”
Tesla’s newest vehicle, the Cybertruck, is still rolling out at a measured pace after its launch in November. The company said that the ramp-up of the stainless-steel clad truck will be slower than other cars. He didn’t give an annual sales target for the model.
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New products are of particular importance to Tesla because it has a fairly limited lineup, which also includes the top-selling Model Y and Model 3. While sales of those popular vehicles have soared every year since they’ve been introduced, they still had relatively high sticker prices. As high interest rates and inflation hit family budgets last year, Tesla dramatically marked them down, and its cheapest car now starts at around US$45,000.
However, that ate into profits. The company’s automotive gross margin, excluding regulatory credits, came to 17.2% for the quarter, far lower than in years past. Still, that’s a slight improvement over last quarter’s 16.3%, which was the lowest in over four years. Tesla blamed the lower profitability in the fourth quarter on its price cuts, higher R&D spend and other costs such as the Cybertruck production ramp-up.
“Tesla is signalling that the days of 50% or even 30% to 40% growth year-over-year is not going to happen in 2024,” Seth Goldstein, a Morningstar Research analyst, said in an interview. “At a certain point, you can’t cut prices anymore.”
The EV maker also got a lift from regulatory credits. Revenue from the sale of these credits — used by other automakers to offset greenhouse gas emissions — came to US$433 million, down from the US$554 million last quarter.
Over the next year, the company expects to post better growth from its energy-storage division, the unit that makes utility and home batteries. While the company’s energy-storage deployments dipped in the fourth quarter compared with the previous one, total installations for 2023 were more than double 2022.
