Tesla Inc (NASDAQ:TSLA). achieved record quarterly sales in the last three months of 2023, yet fell behind Chinese automaker BYD in the global electric vehicle (EV) market rankings.
Global sales record
Tesla's global sales reached 484,507 vehicles in the fourth quarter, marking a nearly 20% increase from the same period in 2022 – but this was surpassed by BYD's sales of 526,409 EVs.
Despite this, Tesla maintained its lead over BYD in total full-year sales.
This heightened competition comes as Tesla confronts increasing challenges from BYD and established global automakers expanding their EV portfolios.
The near 20% growth in Tesla's sales represents a slowdown from its earlier 38% annual gain, falling short of its ambitious 50% annual growth target.
Meanwhile, the overall demand for EVs appears to be decelerating, affecting all brands.
Legacy brands scale back on EVs
Legacy automakers like Ford and General Motors (NYSE:GM) have scaled back EV production, even as they plan to transition from gasoline-powered vehicles to EVs in the future.
Norway, a strong market for EVs, reported that 82% of its nationwide sales in 2023 were electric vehicles, up from 79% in 2022.
Yet economic uncertainties have led to a reduction in overall vehicle sales by 8%, with the number of EVs sold declining nearly 5%.
Tesla has remained the leading automaker in Norway with a 20% market share, up from 12% in 2022, though union disputes in Nordic countries have posed challenges to Tesla's delivery processes and may continue to impact the company.
To combat increasing competition and ownership costs, Tesla has reduced its vehicle prices, boosting sales but impacting profit margins.
Challenges and controversy
Some of the EV leader’s models, including the Model 3, have lost eligibility for the full $7,500 federal tax credit in the US.
Tesla has also faced challenges such as a major recall and controversies surrounding CEO Elon Musk's public comments.
Analyst Dan Ives of Wedbush Securities, however, views Tesla's sales growth as a positive sign, particularly its achievement of 1.8 million vehicles sold in 2023.
The company's Cybertruck, included in its sales report as "other models", began deliveries in late November. Despite this addition, Tesla trails behind competitors in the electric pickup market.
Tesla's shares showed minimal change following the announcement of its Q4 sales, with stock having doubled in 2023 but still down from its 52-week high. This performance reflects the volatile nature of the EV market in a challenging macroeconomic environment.