TESLA: 1.8 million 2023 sales, but China's BYD was the 4Q EV leader

Tesla Inc. sold a record 1.8 million vehicles globally last year, beating its own forecast, but fell behind China's BYD as the world's top maker of fully electric vehicles in the fourth quarter, according to 2023 sales results.

"Congratulations Tesla team on a great year," CEO Elon Musk wrote on his X social media platform, formerly Twitter. Tesla's full-year production record of 1.85 million was short of Musk's informal goal of 2 million that he set one year ago.

In the fourth quarter, Tesla delivered 484,507 vehicles — a 20 percent increase over the year-earlier period — mostly its mainstream Model 3 sedan and Model Y crossover, the automaker said. Just under 23,000 were for its older and more expensive Model S sedan and Model X crossover.

For full-year 2023, Tesla global sales rose 38 percent compared with its 1.3 million deliveries in 2022, the company said. Tesla's Model Y became the best-selling single model in the world last year, according to an estimate cited by Tesla in a social media post.

Tesla doesn't break out sales by region, but the U.S. and China are its largest markets.

Tesla set a record 484,507 deliveries in global fourth-quarter sales. In the U.S., the automaker sold an estimated 170,000 for the quarter, a 23 percent increase over the year-earlier period, and 670,000 for the year, a rise of 37 percent, according to the Automotive News Research & Data Center.

Despite the strong showing, Tesla's stock price drifted lower following the Jan. 2 sales announcement. Some analysts see the automaker's aging lineup and production constraints for the recently launched Cybertruck pickup as short-term headwinds.

The EV maker's red-hot sales growth since 2018 is cooling, according to the analysts, who expect 2024 deliveries of around 2.1 million units. That would represent growth under 20 percent compared with last year.

"Looking ahead to 2024, we continue to see meaningful downside risk to volume and earnings," Deutsche Bank said in a research note Jan. 3. "Tesla candidly admitted at our recent DB AutoTech conference that it is now at an intermediate lower-growth period, coming after the very strong growth of the Model 3 and Y vehicles seen in the past five years."

Deutsche Bank doesn't see Tesla resuming high growth until it launches a next-generation vehicle platform — perhaps as early as 2025 — that would underpin lower-priced models. The bank estimates the platform could generate annual sales of 5 million vehicles.

In contrast, Tesla's recently launched Cybertruck pickup is expected to sell modestly because of limited supplies of in-house battery cells, the bank said. It maintained its "buy" rating for Tesla stock based on expectations of improved growth after 2024, while noting that more bullish analysts see Tesla's sales next year at 2.2 million or more.

One reason Tesla needs a low-cost platform is because of competition from Chinese EV makers, who are successfully challenging Tesla in China and expanding into markets where Tesla has significant sales, including Europe.

China's BYD sold 526,409 battery-electric vehicles in the fourth quarter, taking the EV crown from Tesla for the period. Tesla still sold more EVs for the year, but the Chinese automaker has a broader lineup with more affordable options than Tesla, giving it a competitive advantage.

BYD's total 2023 sales, including gasoline-electric hybrids, was 3 million, according to Bloomberg.

"Competitive companies like BYD are offering a range of models at a range of prices, some below Tesla's least-expensive Model 3 variant," said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions. "Strong competition among all of the EV makers around the world is crowding all of the players, and Tesla has not avoided that pressure."

Fiorani expects Tesla to expand global output to around 2 million vehicles in 2024, representing the full capacity of Tesla's four global assembly plants in California, Texas, Berlin and Shanghai.

"Production of the Cybertruck in 2024 will be a fraction of the expectations of many. It should be considered a successful launch if the company can produce 40,000 in the truck's first full year," Fiorani said. "While the Cybertruck may provide revived shock value of a Tesla on the street, the demand will not be as widespread as the far more vanilla Model 3 or Model Y."

AutoForecast sees global demand for Tesla vehicles expanding to 2.6 million vehicles annually by the end of the decade, well short of Musk's predictions of up to 20 million per year in a similar time frame.

"Supply of Tesla's current range is adequate for the global demand," Fiorani said. "Expanding that demand for the Cybertruck or the pending smaller models could require some additional supply, but it's unlikely to need millions of units."