As 2023 comes to an end, industry leader Tesla's annual delivery of electric vehicles is expected to hit a new record, but it is still some way off Musk's goal of 2 million vehicles. Faced with slowing electric vehicle sales, Tesla has used its industry-leading profit margins to slash prices on four models globally and focus on China, where it has lost market share to local players such as BYD.
Notably, some of Detroit's auto giants, including General Motors Co.
"The fourth quarter is typically the strongest of the year in terms of Tesla deliveries, and we expect that to be the case this year as well," said Garrett Nelson, senior analyst at CFRA Research.
According to a survey of 14 analysts by LSEG, Tesla may deliver 1.82 million electric vehicles globally in 2023, a 37% increase from 2022, and approximately 473,000 vehicles in the fourth quarter.
At the beginning of this year, Musk predicted that Tesla's overall demand situation would remain good. Based on the continued improvement of production capacity, if there is no external interference, it may reach 2 million vehicle deliveries. By October, though, he warned that rising borrowing costs were putting pressure on demand.
The company boosted year-end sales by increasing discounts on key models and said it aims to achieve average annual growth of 50% in the next few years.
Going into 2024, the EV market leader will have to deal with losing federal tax credits for some of its vehicles in the United States and Germany, where the government ended its EV subsidy program early. While interest rate and battery raw material cost concerns are expected to ease, this could force Tesla to cut prices further next year.
Daiwa Capital Markets analyst Jairam Nathan lowered Tesla's delivery forecast for next year to 2.04 million vehicles from 2.14 million vehicles and said he expects average revenue per vehicle to fall 4% from 2023.
The company is also dealing with increased regulatory scrutiny of its self-driving systems and other components in the United States and some European countries. Earlier this month, Tesla recalled more than 2 million vehicles. The safety recall covers almost all Tesla models sold in the United States.
Analysts surveyed by VisibleAlpha expect Tesla to deliver 2.2 million vehicles next year. Most people believe that the newly released Cybertruck and updated Model 3 will not be enough to boost demand.
Investors expect Tesla's profit margins to remain under pressure as it ramps up Cybertruck production and prepares to launch cheaper vehicle platforms.
RBC Capital Markets analyst Tom Narayan said in a report that the Cybertruck will account for 3% of Tesla sales by 2024, calling it more of a "halo" product that may attract consumers to the brand.
Wedbush analyst Dan Ives believes Tesla is expected to join the trillion-dollar market capitalization club next year, despite Wall Street's growing skepticism about electric vehicle demand.
Ives reiterated his multi-year Outperform rating on the stock and raised his 12-month price target to $350 from $310. Ives also believes that Tesla's gross profit margin has now stabilized and should begin to rise as we enter 2024.