Elon Musk‘s Tesla, a forerunner in the electric vehicle (EV) market, experienced a more than 9% collapse in pre-market trade share prices on Thursday following its earnings report, which fell short of expectations and hinted at a potential slowdown in 2024. The electric carmaker once celebrated for its ambitious sales growth, now faces intensified competition, causing a reassessment of its sales targets.
Over the last five days, the Tesla share price lost more than 10%. The company’s recent declaration of a potential decline in vehicle volume growth in 2024 compared to the previous year has raised concerns among investors and market analysts. This cautionary statement comes as Tesla grapples with increasing challenges from rival EV brands, prompting it to revise its previously bullish sales growth outlook.
Despite a 38% increase in 2023 deliveries, Tesla‘s growth fell short of its expected 50% annual rate. This shortfall was revealed amidst growing competition and the company’s strategy of slashing prices to sustain sales momentum. Tesla‘s fourth-quarter results marked the first time it lost the global EV sales lead to Chinese automaker BYD, signifying the rising threat from international competitors.
Elon Musk, acknowledged the competitive prowess of Chinese carmakers, predicting their significant success in global markets. The company’s financials reflect this competitive landscape, with automotive revenue in Q4 2023 showing a mere 1% year-on-year increase to $21.6 billion. The bigger picture of Tesla‘s outlook appears grim, as it anticipates lower vehicle volume growth while preparing to launch its next-generation vehicle in Texas.
Global price cuts, particularly in Europe and China, have also impacted Tesla‘s margins. These strategic price reductions, while boosting sales, have led to a decline in the company’s profitability.
Adding to Tesla‘s woes, several brokers have downgraded their price targets for the company. Barclays, RBC, and Canaccord Genuity have all revised their forecasts, citing concerns over Tesla’s future growth trajectory and the uncertainties surrounding its upcoming vehicle launches, including the Cybertruck.
The diminished sales growth forecast and the subsequent stock price drop mark a pivotal moment for Tesla. As it navigates a highly competitive and rapidly evolving EV market, the company’s ability to maintain its innovative edge and meet its ambitious growth targets will be crucial in determining its future success.
