(CNN) — Tesla has become the world’s most valuable automaker by promising unprecedented sales growth. But, faced with soaring sales of electric vehicles from rival brands, Tesla backtracked on its sales targets on Wednesday.
Tesla has been cutting prices for more than a year to boost sales in the face of growing competition. As a result, the company’s deliveries for 2023 increased by 38% compared to the previous year. While it may seem like a big leap, the company previously said it was targeting an average annual growth rate of 50% for several years.
This Wednesday it warned that its “growth rate could be significantly lower” in 2024 than last year. Tesla shares fell 7.5% in premarket trading on Thursday.
The fourth quarter marked the first time the company lost leadership in global EV sales to Chinese manufacturer BYD.
Tesla CEO Elon Musk told analysts on a call that Chinese automakers are “the most competitive automakers in the world” and “will have significant success outside of China.”
The remarks come at a time when BYD, backed by Warren Buffett, has not only staked its claim but is also making inroads into other markets. In December it committed to opening a plant in Hungary, its first passenger car manufacturing plant in Europe.
Growing competition from BYD and other Chinese manufacturers has triggered an anti-dumping investigation by European Union authorities that could lead to higher tariffs. Musk, who previously mocked Chinese electric vehicle brands, believes they now pose an existential threat.
“Frankly, I think if you don’t put up trade barriers, you’re going to kill most of the automakers in the world,” Musk said.
Tesla’s 50% sales growth goal has been a key factor in boosting shares and making the company the most valuable automaker on the planet, even though it supplies far fewer vehicles than other, larger automakers.
The company said the slowest pace of growth will occur while “our teams work on the launch of the next-generation vehicle.”
That next-generation vehicle, likely a lower-priced model, has not yet been revealed by the company, and Tesla vehicles often face delays before reaching the market.
The company warned that the launch of its newest vehicle, the long-delayed Cybertruck pickup that entered production in late 2023, “will be longer than other models given its manufacturing complexity.” Musk said three months ago that the Cybertruck could take more than a year to become profitable for the company.
The new growth target came amid a disappointing overall earnings report. Tesla reported adjusted earnings of 71 cents per share, just below the 74 cents per share expected by analysts surveyed by Refinitiv, but down 40% from a year earlier.
This is the second consecutive quarter the company has missed earnings forecasts, following a string of better-than-expected earnings reports dating back to the start of 2021.
Revenue for the quarter came in at $25.2 billion, just 3% higher than a year earlier, despite higher deliveries, and a sign of the impact of lower average selling prices on the back of repeated price cuts. Revenue also fell short of forecasts at $25.6 billion. Shares fell 5% in after-hours trading.
