Electric vehicle (EV) maker Tesla has issued a warning that its sales growth in 2024 may be impacted until the company introduces more affordable vehicle options. The announcement follows a rocky start to the first quarter of the year for Tesla, which saw shares drop by over 16%. While the company reported a net profit of nearly $8 billion in the fourth quarter, this was largely due to a one-time tax-related matter of nearly $6 billion. Without this, profits would have dropped by almost 40% compared to the previous year.
Tesla has experienced significant growth in recent years as it expanded production and deliveries of its Model Y and Model 3 vehicles. However, the company failed to meet analysts’ forecasted estimates in the fourth quarter, leading to a decline in share prices. According to Tesla CEO Elon Musk, predicting the future situation is challenging, stating, We don’t have a crystal ball, so it’s difficult to predict with precision.
To address the potential impact on sales growth, Tesla has plans for an upcoming next-generation vehicle that surpasses its current successful fleet. The company stated that its vehicle volume growth rate in 2024 may be notably lower due to the focus on launching the next-generation vehicle at Gigafactory Texas. Tesla will build the new vehicles at a new plant in Mexico. However, Musk acknowledged that timing is often optimistic in his predictions, anticipating the production of the next-generation vehicle to commence in late 2025.
In addition to the sales growth warning, Tesla is also facing concerns related to supply and demand at the beginning of 2024. Mr. Musk mentioned that the company is working to improve its Cybertruck pickup vehicle and expects more challenges before a noticeable boost in production.
Regarding his involvement with the company, Musk expressed his desire to attain at least a 25% stake in Tesla to ensure significant influence without full control. He intends to develop artificial intelligence (AI) products for Tesla but mentioned pursuing AI initiatives elsewhere if his stake increase doesn’t materialize.
Furthermore, Musk revealed that there have been preliminary discussions with other car manufacturers about their potential licensed use of Tesla’s full self-driving system. However, no concrete outcomes have emerged thus far. Musk attributes the skepticism to the belief that the system isn’t yet deemed reliable enough. Tesla first introduced its full self-driving hardware for sale in late 2015, and Musk made promises about autonomous robotaxis by 2020 and autonomous cars in 2022. As of now, the system’s readiness is projected for 2023.
Tesla’s cautionary statement about sales growth in 2024 highlights the challenges and uncertainties the company faces. Despite previous achievements, Tesla acknowledges the need for more affordable vehicle options to sustain its growth trajectory. The introduction of a next-generation vehicle is anticipated, but the timeline for production remains subject to Musk’s optimistic forecasts. The company also continues to work on addressing supply and demand issues and improving its Cybertruck pickup vehicle. While Tesla aims to expand its influence by increasing Musk’s stake, discussions with other car manufacturers regarding Tesla’s self-driving system have yet to result in tangible partnerships.
