Tesla’s Record Deliveries Spike by 38% Thanks to Year-End Sales Tactics

Tesla just hit a major milestone with their electric vehicle deliveries soaring by 38%, smashing market predictions and achieving their ambitious 2023 goal of 1.8 million vehicles. This success story comes on the heels of a year filled with strategic price reductions and a strong push in sales as the year wrapped up.

In the final quarter alone, Tesla handed over a whopping 494,989 vehicles. However, they were still a step behind China’s BYD, Tesla’s key competitor globally, which delivered 526,409 fully electric vehicles. Despite this, Tesla led the race in total electric vehicle deliveries for the year.

Backed by Warren Buffett, BYD’s impressive delivery numbers, totaling 3.02 million for the year, indicate that their price cutting strategies are paying off. Susannah Streeter, a financial expert at Hargreaves Lansdown, noted that while this aggressive pricing might squeeze profit margins, BYD sees it as a worthwhile investment for expanding its market presence.

Tesla didn’t hold back either, rolling out discounts and perks like six months of free fast charging for customers who received their cars by the end of December. This move was particularly aimed at boosting sales of the compact Model 3 sedan, which is set to lose some U.S. federal tax benefits in 2024. These efforts propelled Tesla’s growth to 11% over the previous quarter, surpassing the 473,253 estimate by analysts.

After overcoming production challenges in the third quarter, Tesla managed to produce a record 494,989 vehicles in the last quarter, rounding off the year with a total production of 1.85 million units. Despite these impressive numbers, Tesla’s stock remained stable in a generally declining market.

Gary Bradshaw, a portfolio manager at Hodges Capital and Tesla shareholder, commented on Tesla’s performance, highlighting that although it didn’t quite reach the 40% growth target set by CEO Elon Musk, it far outstripped the growth of U.S. domestic car companies.

Rivian, another player in the electric vehicle market, didn’t fare as well, missing market expectations amid a general downturn in EV demand. This trend has prompted caution among U.S. automakers like Ford and General Motors regarding their EV production plans.

Tesla has also been under the regulatory microscope for its self-driving technology. The company recently recalled over 2 million vehicles to update their Autopilot driver-assistance system after safety concerns were raised by federal regulators. Consumer Reports expressed skepticism about the effectiveness of these software updates in preventing misuse and driver distraction.

Future Price Cuts Likely as Tax Credits End

Analysts predict Tesla might need to further slash prices, particularly for models like the Model 3 variants that lost their tax credit. According to Seth Goldstein from Morningstar, these cuts, which began last January, were a response to higher interest rates. However, if borrowing costs decrease, Tesla might hold off on further reductions.

The rear-wheel drive and long-range versions of Tesla’s Model 3 have lost their $7,500 federal tax credit this year, a result of new battery material sourcing requirements under the Inflation Reduction Act (IRA).

In the last quarter, Model 3 and Model Y vehicles dominated Tesla’s deliveries, accounting for 461,538 units. The company didn’t specify if these numbers included their newly launched Cybertruck.