Electric car leadership

Tesla still queen in 2023. But it overtakes BYD in the fourth quarter

The above-estimated performance in the fourth quarter was enough to secure a record 1.81 million cars delivered. But Chinese rivals are getting closer

by Alberto Annicchiarico

2 January 2024

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La nuova Tesla Model 3 restyling Highland durante una fiera internazionale a Pechino, lo scorso settembre. REUTERS/Florence Lo/File Photo

4' min read

Key points

The 2024 forecast
The obstacles to be overcome
Strike does not stop sales in Scandinavia

4' min read

Overtaking postponed until 2024. Tesla has not lost the lead, yet. But the Chinese group BYD sees its crown as the world's leading producer of battery-powered cars getting closer (it is already first in electrics, with 3 million, adding plug-in hybrids, more than 9 out of 10 sold in China). Tesla's above-estimated performance in the fourth quarter, usually the best of the year for the American company, was enough to secure it a record 1.808 million cars delivered (+38% over 2022). But the result - 484,507 against BYD's 526,409 - marks the first historic overtaking of the Chinese giant over the Austin hare. Tesla, despite the boost from December's offers and discounts, fell short of the target of 2 million units per year that CEO Elon Musk set twelve months ago.

"This was an important quarter for Tesla," noted Dan Ives, analyst at Wedbush, "as demand has increased since the third quarter based on all of our global controls. Listings remained stable and indeed we saw increases in China during the quarter as the price war is finally in a lull. Reaching 1.8 million vehicles by 2023 was an important achievement in a difficult macroeconomic environment for electric vehicles.

"Tesla is delivering. The 38% increase in deliveries is not the 40% that Musk would have liked to see, but it is much, much, much better than the other American manufacturers," commented Gary Bradshaw, Hodges Capital manager and shareholder.

The forecast for 2024

According to 14 analysts polled by LSEG, Tesla was expected to deliver 1.82 million vehicles globally in 2023, a 37% increase over 2022 (1.31 million, +40% over 2021), with around 473,000 units in the fourth quarter (405,000 a year ago). Analysts polled by Visible Alpha now forecast 2.2 million deliveries by Tesla in 2024, but if BYD maintained its current pace it would leapfrog to the lead with 2.8 million.

Investors expect Tesla's margins to remain under pressure: between Q3 2022 and Q3 2023, the operating margin fell from 17.2% to 7.6%. In the face of slowing sales this year, Tesla has indeed sacrificed margins, top in the industry, and reduced the prices of its four models, with a focus on China, where the company has lost market share due to the thick patrol of fierce local competitors. In the United States, on the other hand, the slowdown in demand has convinced Ford and GM to put the brakes on plans to electrify the range, leaving Tesla as the undisputed leader and helping its shares to close 2023 with 130 per cent growth.

Today the stock remained in negative territory for most of the session.

The obstacles to be overcome

In the United States, there has been no shortage of major obstacles: in mid-December, Tesla had to 'recall' almost all of its 2 million vehicles on the road in the United States to make the assisted driving software safer. Musk insists that autonomous driving could one day represent the bulk of Tesla's value. And this, too, is helping to prop up the Texan brand in the financial markets. In addition, the Biden Administration has just made public the list of models that fall under the criteria to benefit from tax credits of up to $7,500 per car. A system designed to force manufacturers in the US not to use components from China, in particular, starting with the minerals contained in batteries. The number of eligible models has been more than halved and among the best-selling Teslas the Model Y has been saved, but not the rear-wheel-drive, long-range Model 3. Also off the list is the new pick-up Cybertruck. The excluded models can re-enter the list if they comply with the new rules.

And while the Model Y remains the global sales leader, including Europe, the Cybertruck, according to Musk, will be a small percentage of the vehicles Tesla will produce in 2024. According to Tom Narayan, an analyst at RBC Capital Markets, the Cybertruck will account for 3 per cent of Tesla's volumes in 2024, and will be more of a 'booster' product that could attract consumers to the brand.

Strike does not stop sales in Scandinavia

Meanwhile, good news from Scandinavia, despite the trade union agitation that has been going on for weeks to obtain contracts with more protections for Swedish employees. New Tesla registrations in Sweden increased in December compared to the previous year and the market share rose from 4.6 per cent to 6.1 per cent. Data from the Swedish automotive industry association Mobility Sweden show that 1,789 new Teslas were registered in December, compared to 1,645 in the same month in 2022.

Confirmation in Norway, where Tesla is number one for the third year running. The overall market share of the Texan manufacturer has risen to 20 per cent (from 12.2 per cent in 2022) in a market with less than 200,000 registrations but 90 per cent battery-powered cars.

Alberto Annicchiaricovicecaposervizio
Luogo: Milano
Lingue parlate: inglese (C1), buona comprensione di francese e spagnolo
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