In the ever-changing world of the automotive industry, Tesla, the electric car leader, recently experienced a drop in its sales forecast. As competition in the electric vehicle space increases, Tesla has had to scale back its growth targets.
For more than a year, Tesla has been forced to lower prices to boost sales in the face of increased competition. As a result, car deliveries in 2023 increased by 38% compared to the previous year. While this may seem like a significant progression, the company had initially forecast 50% annual growth over several years.
On Wednesday, Tesla warned that its “growth rate could be notably lower” in 2024 than in 2023. The news sent Tesla shares down 7.5% in premarket trading Thursday.
In the fourth quarter, Tesla ceded first place in global sales of electric vehicles to Chinese manufacturer BYD. At a conference with analysts, CEO Elon Musk said Chinese automakers are “the most competitive in the world” and will “enjoy significant success outside of China.”
This increased competition from BYD and other Chinese automakers has prompted an anti-dumping investigation by European authorities, which could lead to the imposition of higher customs duties. Musk, who once ridiculed Chinese electric vehicle brands, now believes they pose an existential threat.
“Frankly, I think if no trade barriers are put in place, they will demolish almost every other car company in the world,” Musk said.
The 50% sales growth was a key factor in Tesla’s rising stock value and its position as the world’s most valuable automaker, despite the fact that it delivers far fewer vehicles than larger automakers. established.
The company also announced that its slower growth would be due to “launch of the next generation vehicle”. This new vehicle, likely a more affordable model, has not yet been revealed by the company and it is common for Tesla vehicles to experience delays before being released.
Tesla’s quarterly report did not live up to expectations. The company reported adjusted earnings of 71 cents per share, slightly lower than the 74 cents expected by analysts, but down 40% from a year earlier.
Revenue for the quarter was $25.2 billion, up just 3% from a year earlier, despite an increase in shipments, a sign of the impact of declines repeated prices. Revenue also fell short of forecasts of $25.6 billion. Shares were down 5% in after-hours trading.
In this period of turbulence for Tesla, observers wonder how the company will cope with growing competition from Chinese manufacturers. With a rapidly expanding electric vehicle market, there is no doubt that Tesla will need to constantly innovate and adjust its strategy to remain competitive and maintain its leadership position in this ever-changing market.