Price Cuts Boost Tesla 4Q Sales, Beating Estimates as EV Growth Rate Slows

DETROIT — Tesla Inc., the electric vehicle manufacturer, used sizeable price reductions to boost its vehicle sales by almost 20% in the fourth quarter, in contrast to a slowing growth rate in the electric vehicle sector. On Tuesday, the Austin-based company stated that it sold 484,507 vehicles worldwide from October to December, comfortably surpassing Wall Street's prediction of 473,000 for the quarter, based on data from FactSet.

Looking at the full-year sales performance, Tesla reported sales of more than 1.8 million vehicles for the year, a rise of 37.7% from 2022 figures. This fell short of CEO Elon Musk's forecast of 50% sales growth for most years. However, it did break the company's annual target of 1.8 million vehicle sales.

In order to maintain competitive, Tesla implemented multiple price reductions over the year in the U.S., which at times reached $20,000 on some of its higher-end models. Even the rear wheel drive 3, its lowest-priced model, saw a decrease of at least $6,600. Due to these adjustments, industry analysts predict that Tesla's profit margins may shrink when it reveals earnings on January 24th.

In terms of competition and market position, Tesla's sales growth enabled the company to fend off competition from Chinese giant BYD and retain its position as the leader in electric vehicle sales worldwide. BYD reported an increase of 73% in EV sales last year, selling 1.57 million vehicles. As is customary, the majority of Tesla’s sales were for its less expensive Models 3 and Y, which had global deliveries of 461,538 in the fourth quarter, a 19% increase from the prior year. Sales of other models, primarily the S and X, along with some new Cybertrucks, rose 34% to 22,969. While Tesla did not provide a breakdown of sales for individual models, it disclosed that almost 495,000 vehicles were manufactured for the quarter, about 10,000 more than were sold. Tesla's shares experienced a minor decline in Tuesday's afternoon trading.