According to Elon Musk, only trade barriers are stopping Chinese manufacturers from “destroying most other car companies in the world.” The times of rapid growth at Tesla are over.
Without trade barriers, Tesla boss Elon Musk believes that large parts of the auto industry would have no chance against Chinese manufacturers. “They are extremely good,” said Musk in a conference call with analysts after presenting current quarterly figures. “If there are no trade barriers, they will pretty much destroy most other car companies in the world,” the tech billionaire predicted.
BYD on the way to number one
In fact, Tesla is also increasingly feeling the effects of competition from the Far East. In the fourth quarter, the US company had to give up its place as the leading manufacturer of electric vehicles in terms of sales figures to BYD from China. The Chinese scored points with customers with a model range that is both cheaper and more diverse.
Even though Tesla was still ahead with 1.81 million vehicles delivered worldwide in 2023 as a whole, industry experts assume that BYD will sell more electric vehicles than Tesla in the long term. So far, an import tariff of 25 percent in the USA has kept Chinese car manufacturers out of the market.
Tesla missed Market expectations
Yesterday evening, when presenting the figures for the fourth quarter, Musk had to admit that the times of rapid growth rates at Tesla are over: The Tesla boss reported a sales increase of three percent for the months October to December – the lowest sales growth in three years. With revenues of $25.2 billion, Tesla also fell well short of market expectations; analysts had, on average, expected revenues of almost $25.9 billion.
The weak sales development is also due to the massive price reductions that the group granted its customers in order to achieve its sales target of 1.8 million vehicles delivered. The most popular Model Y in the USA costs around 26 percent less than before.
Profit margin falls
Tesla achieved its sales target in this way, but profitability fell significantly: the group reported a gross profit margin of 17.6 percent. For comparison: a year ago it was 23.8 percent. Analysts were currently expecting 18.3 percent.
For the current year, Musk expects a “significant” slowdown in sales growth as Tesla works to introduce the next generation of vehicles at the Gigafactory Texas. Yesterday, the tech billionaire did not repeat his previously stated goal of achieving an average annual growth rate of 50 percent over several years.
CEO spreads optimism
Nevertheless, Musk painted a rosy picture for the future: The company is only between two waves of growth: one through the Models 3 and Y, and also through a second wave that begins with the next generation vehicle platform. Tesla is developing a “revolutionary” production system and could even become the most valuable company in the world.
The new production process is intended, among other things, to build a cheaper compact model. According to current plans, production should begin in Austin, Texas, in the second half of 2025, Musk said. At the same time, he qualified: “I am often optimistic about time.”
Investors send Tesla shares plummeting
Few investors on the stock market wanted to believe him anyway. In early trading in Frankfurt, Tesla shares fell by over seven percent – investors were disappointed with the company’s balance sheet and growth prospects.
The most valuable company in the world is currently Apple with $3.02 trillion, closely followed by Microsoft: The software company recently benefited massively from the excitement around artificial intelligence (AI) and yesterday became the second company in the history of the stock market to break the three trillion mark dollars in goodwill. With a current market capitalization of $661 billion, Tesla would still have a long way to go until it becomes the company with the highest stock market value, as Elon Musk apparently has in mind.
With information from Angela Göpfert, ARD financial editorial team.