Tesla warns sales growth this year could be ‘notably lower’

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Tesla said sales growth for its electric vehicles would be “notably lower” this year than in 2023 as it revealed slower revenue growth and a shrinking gross margin for the final quarter of last year.

Revenue at the US car manufacturer run by Elon Musk rose 3 per cent to $25.2bn, marking its slowest pace of growth in more than three years and coming in below analyst expectations of $25.6bn, according to an earnings report on Wednesday.

Tesla said it had hit its target of delivering 1.8mn cars in 2023. Wall Street had predicted Tesla would sell about 2.2mn vehicles in 2024, which would mark an increase of 20 per cent — far lower than the 50 per cent annual growth rate it pledged three years ago. Tesla unusually did not offer a specific delivery target for 2024 on Wednesday.

“In 2024, our vehicle volume growth rate may be notably lower than the growth rate achieved in 2023, as our teams work on the launch of the next-generation vehicle at Gigafactory Texas,” Tesla wrote in its shareholder note.

China’s BYD overtook Tesla as the world’s top electric-vehicle manufacturer in the fourth quarter of 2023, delivering 1.58mn fully electric cars.

Tesla’s earnings come amid concerns about stalling global demand for electric vehicles and showed the impact that price cuts have had on its results. The company’s shares fell as much as 5 per cent on Wednesday in after-market trading.

Tesla reported a gross margin of 17.6 per cent for the quarter, below Wall Street predictions of 18.3 per cent and down from 23.8 per cent a year earlier. Margins were pushed lower in part due to costs associated with increasing production of its new pick-up Cybertruck.

Tesla is the worst-performing stock of the Magnificent Seven big tech companies, which also include Apple, Microsoft, Alphabet, Amazon, Nvidia and Meta. It has stumbled in recent months even as its counterparts have soared to record highs, and the stock has fallen 16.3 per cent year to date.

Price cuts and rising costs, as well as headwinds such as oversupply and weakening demand, have added to the gloomy sentiment. The carmaker has also failed to receive an artificial intelligence-fuelled boost to its share price that its peers have, even though Morgan Stanley analysts called it the “only truly AI-enabling stock” that it covers.

Musk demanded a bigger stake in Tesla in a post on X earlier this month, in exchange for developing AI products at the electric car manufacturer.