Tesla, the electric vehicle (EV) pioneer led by Elon Musk, has predicted a significant sales deceleration this year, joining the ranks of car manufacturers cautioning about weakening demand. The company expects growth to be “notably lower” than the impressive 38% surge seen in 2023, prompting a nearly 6% drop in Tesla’s shares during extended trade in New York.
In response to market dynamics, Tesla executed multiple price reductions last year to sustain demand. Despite achieving a record 1.8 million car sales in 2023, representing a nearly 40% increase from 2022, revenue growth decelerated notably towards the end of the year.
In its quarterly update to investors, Tesla acknowledged that another substantial expansion phase might not materialise until the introduction of a new model. Discussions about a more affordable compact car, positioned below the current Model Y with a starting price of around £45,000 in the UK, have been ongoing.
Elon Musk issued a warning about Chinese EV manufacturers, suggesting that without trade barriers, they could “pretty much demolish most other car companies in the world.” This caution follows China’s BYD surpassing Tesla as the world’s leading electric carmaker in the final quarter of 2023.
The announcement of a sales slowdown aligns with broader indications of weakness in the EV market after several years of robust growth. While EV sales increased in the UK last year, they struggled to gain significant market share against traditional vehicles. In China, where EVs are most prominent, manufacturers have reduced prices amid a slowing economy. In Europe, battery electric car sales dipped nearly 17% in the last month compared to December 2022.
The US market also reflects challenges, with major automakers like Ford and General Motors scaling back electric vehicle production. Tesla reported fourth-quarter revenue of £25.1 billion (£19.7 billion), up only 3% compared to the same period in 2022, and profits that fell below many analysts’ expectations. The EV market is navigating complexities, and Tesla’s cautious outlook aligns with the evolving industry landscape.