Rebecca Elliott - The Wall Street Journal
hinese automaker BYD for the first time topped Tesla as the world’s largest seller of electric vehicles on a quarterly basis, a sign of China’s emerging strength in the global market for battery-powered cars.
BYD reported selling more than 526,000 fully electric vehicles in the fourth quarter of 2023, compared with Tesla’s sales of nearly 485,000 for the same period.
Tesla remained ahead of BYD for the full year. But the Chinese rival’s ascent in the global pecking order has put new pressure on Tesla at a time when the U.S. electric-car maker is already leaning on steep price cuts to juice its sales.
Tesla said Tuesday it delivered about 1.81 million EVs worldwide in 2023, meeting its full-year guidance and slightly beating Wall Street’s expectations.
The figure was 38% higher than the previous year’s, showing that Tesla’s growth rate slowed slightly as the company has entered an increasingly competitive chapter defined by more gradual expansion and slimmer profit margins.
By comparison, BYD sold nearly 1.6 million battery-powered vehicles last year, up more than 70% over 2022. Tesla’s results come as concerns are growing on Wall Street about the level of demand for the company’s cars—and EVs more broadly—in the year ahead.
BYD, which began in 1995 as a battery manufacturer, has become China’s leading seller of so-called new energy vehicles, a category which includes EVs and plug-ins. Its rise reflects China’s growing dominance in the EV space. Many of the country’s automakers have moved more quickly than Western car companies to bring highly digital EVs to market.
BYD also sells EVs that are more affordable than those offered by Tesla, putting a wider swath of the market within reach. It doesn’t yet sell passenger cars in the U.S., but is expanding globally, including in Europe.
Tesla’s next generation of vehicles is expected to include a more affordable car. For now, its least expensive car, the Model 3, starts at about $39,000 in the U.S. The electric-car market has shown signs of cooling after a period of heady growth that has driven robust profit margins for Tesla.
Tesla Delivered 1.81 Million Cars Globally in 2023, Hitting Full-Year Target© Provided by The Wall Street Journal
In the U.S., some automakers are finding that fewer people are ready to go electric than they expected as anxieties about finding enough places to publicly charge persist and higher interest rates make cars more difficult to afford.
Rival electric-vehicle maker Rivian Automotive also on Tuesday said it delivered 50,122 EVs last year, missing Wall Street’s expectations. The company’s vehicle sales for the fourth quarter fell 10% from the third quarter, despite an increase in factory output. Its stock was down roughly 11% in afternoon trading.
Other major car companies are expected to report year-end sales figures for the U.S. Wednesday. Abroad, competition continues to intensify in the EV space.
Tesla’s share of China’s electric-vehicle market has held relatively steady nevertheless, ticking up to nearly 12% in the first 11 months of 2023, from almost 11% a year earlier. Full-year sales figures for the country have yet to be reported.
The company’s stock price was down less than 1% in afternoon Tuesday. Tesla shares roughly doubled in value in 2023 as the company slashed prices to juice demand and Wall Street regained confidence in the company’s ability to execute on its longer-term plans.
Tesla aims to develop autonomous cars and halve production costs for its next generation of vehicles, which is widely expected to include a more affordable car. In the near term, many investors are bracing for a tougher year ahead.
Tesla delivered its first Cybertruck pickup trucks to customers late last year, a milestone for a company that hadn’t rolled out a new passenger-vehicle model in three years.
However, Chief Executive Elon Musk has warned that the process of ramping up factory production of the futuristic truck is likely to be arduous and expensive. The company didn’t disclose how many Cybertrucks it sold in 2023.
Meanwhile, Tesla’s steep price cuts over the past year have squeezed the company’s once industry-leading operating margin, which as of the third quarter had fallen more in line with other major automakers.
Some on Wall Street question how much more room Tesla has to grow without another less expensive car in its lineup. Its Model 3 sedan and Model Y crossover made up 96% of Tesla’s global deliveries last year.
Starting in January, Tesla’s entry-level and midtier variant of the Model 3 no longer qualify for a $7,500 federal tax credit, as restrictions tighten on EVs with battery components made in China.
“In the very near term, we think worries over 2024 growth could dampen investor sentiment somewhat, especially considering the meaningful downside risk to next year’s earnings,” Deutsche Bank analyst Emmanuel Rosner wrote in a note to investors about Tesla before the new year.
Wall Street expects the company to sell around 2.1 million vehicles globally in 2024, according to FactSet. In 2023, Tesla grew at a faster pace than the global EV market, which expanded an estimated 33%, according to GlobalData.
Tesla is scheduled to report year-end financial results on Jan. 24. Wall Street expects Tesla’s annual profit to slide roughly 26% to $9.3 billion, according to FactSet. Analysts forecast revenue will rise around 20% to $97 billion.
