Tesla’s Electric Vehicle Sales Rebound in Q4, but Annual Growth Slows
A Sluggish Start to the Year
Tesla’s global sales experienced a modest 2.3% increase in the fourth quarter, a welcome respite from a lackluster start to the year. Despite this uptick, the electric car company faced its first year-over-year sales decline since 2015, with annual sales dipping 1.1% to 1.79 million vehicles.
Boosting Deliveries
The Austin, Texas-based company delivered 495,570 vehicles from October through December, contributing to a total of 1.79 million deliveries for the full year. However, this figure fell short of Wall Street estimates, which predicted sales of 498,000 vehicles.
The Cost of Growth
The fourth-quarter boost came at a cost, as analysts expect Tesla’s average sales price to plummet to just over $41,000, the lowest in at least four years. This decline in pricing may negatively impact Tesla’s fourth-quarter earnings, set to be announced on January 29.
Challenges Ahead
Tesla’s prediction of 50% annual sales growth has been derailed by an aging model lineup and increased competition in China, Europe, and the U.S. In the U.S., early adopters of electric vehicles have already made their purchases, leaving more mainstream buyers hesitant due to concerns about range, price, and charging infrastructure.
Market Share Under Pressure
Competition from legacy and startup automakers is growing, as they seek to erode Tesla’s market share. The company’s profit margins, once industry-leading, have been cut into by discounts offered earlier in the year. Nearly all of Tesla’s sales came from the smaller and less-expensive Models 3 and Y, with only 23,640 units sold from its more expensive models.
Global Electric Vehicle Sales
Tesla’s global electric vehicle sales narrowly edged out Chinese rival BYD, which announced a 41% increase in sales last year, totaling 1.77 million EVs. The two companies are vying for the top spot as the world’s leading EV maker.
Production Falls Short
Fourth-quarter production of 459,445 vehicles fell below total deliveries for the quarter, while full-year production of 1.77 million was less than the year’s sales. Despite this, Tesla shares have surged over 50% in the last 12 months, buoyed by the election victory of Donald Trump.
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