Tesla car sales are growing slower than expected, amplifying concerns

Tesla said Monday that shipments in the last three months of the year were up 18% from the previous quarter, disappointing Wall Street analysts and adding pressure on company chief Elon Musk. to focus on building cars rather than redesigning Twitter.

Tesla said it delivered 405,000 electric cars from October to December. Wall Street analysts had predicted Tesla would sell about 420,000 vehicles, down from 343,000 vehicles in the third quarter.

The company sold a total of 1.3 million cars in 2022, an increase of 40% over the previous year. That was below the 50% annual growth target that Tesla had set for itself.

While the increases were impressive by auto industry standards, Tesla became the world’s most valuable automaker by expanding at the sizzling rates more commonly associated with Silicon Valley tech companies.

In recent months, Tesla has appeared vulnerable to competition from established automakers and rising borrowing rates that have made its electric cars more expensive for people taking out loans. Indications that Tesla is deadly contributed to a 65% drop in Tesla shares in 2022 and led investors to focus more on conventional metrics such as sales and earnings rather than dreams of world domination.

Fourth-quarter deliveries were lower than forecast by analysts, who had already lowered their expectations, and lower than Tesla executives suggested just a few months ago. Tesla said it produced 440,000 cars in the quarter, 34,000 more than it delivered, suggesting supply chain issues and production issues were not the main explanation for sales disappointing.

Martin Viecha, head of investor relations at Tesla, said on Twitter that the discrepancy between deliveries and production reflected vehicles in transit to customers.

There was no trading in New York on Monday due to the New Year holiday. But the numbers will likely bolster investor fears that Mr. Musk is too focused on Twitter, which he acquired in October.

“No way to sugarcoat that,” Gary Black, managing director of the Future Fund, an investment fund, said on Twitter. He predicted that analysts would cut their estimates for Tesla’s sales and earnings in 2023. Tesla will release its 2022 results on January 25.

Mr Musk last week tried to reassure Tesla employees, telling them not to fixate on the stock price and reiterating claims that the automaker would become the world’s most valuable company, a reported Reuters.

China, the world’s largest auto market, is at the center of investors’ concerns. The sharp rise in Covid cases in China has weighed on demand and forced the company to periodically suspend production at its largest factory, in Shanghai.

Moreover, Chinese automaker BYD has overtaken Tesla in electric vehicle sales in China, casting further doubt on Mr. Musk’s ability to dominate the world in the auto industry.

Tesla’s sales growth outpaces any major competitor by percentage. The company is also among the most profitable automakers in the world and is setting up new factories in Texas and Germany.

But the company faces more intense competition from traditional automakers like Ford, General Motors and Volkswagen. These companies have decades of experience mass-producing vehicles at lower cost, and some investors believe these automakers could catch up with Tesla faster than expected.

Tesla also faces slowing consumer demand, in part due to rising interest rates. Wait times for Tesla models have fallen, and the company has reduced car prices in China and offered incentives to buyers in the United States.

Car buyers, especially left-leaning, environmentally conscious consumers who tend to buy electric cars, also appear to be turning away from Tesla because of Mr. Musk. His erratic behavior on Twitter and impassioned rhetoric on the social media platform endeared him to conservatives and Silicon Valley executives, but outraged others.

Daniel Ives, an analyst at Wedbush Securities who pleaded with Mr. Musk to focus his energy on Tesla, said fourth-quarter shipments were okay given the tough economic environment. “We think it was a relatively good performance,” Mr Ives said on Twitter.

Tesla’s sales could increase after its cars became eligible for federal incentives on Jan. 1. A new law removed a limit on the number of vehicles from a single manufacturer that were eligible for tax credits of up to $7,500. Tesla had exhausted its quota.

Tesla cars made in the company’s factories in Texas and California also meet the requirement that vehicles must be manufactured in the United States, Canada or Mexico to be eligible for the credits.

Mr. Musk, a prolific Twitter user, did not immediately react to Monday’s delivery figures. On Sunday, he wished his followers a “Happy 1 Day 2023”, adding: “One thing is for sure, it won’t be boring”.


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