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    Home»Business»Elon Musk Says That EV Sales Growth Could Be “Notably Lower” In 2024
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    Elon Musk Says That EV Sales Growth Could Be “Notably Lower” In 2024

    DavidBy DavidJanuary 25, 2024Updated:January 25, 2024No Comments5 Mins Read
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    Musk Expects 2024 EV Sales Growth to Be "Notably Lower"
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    According to earnings released Wednesday, Tesla’s plan to boost sales by lowering prices, along with the cost of making the Cybertruck and other R&D costs, put pressure on profits in the fourth quarter.

    The company has continued to grow sales, delivering a record-high 1.8 million EVs in 2023. However, this hasn’t led to the same increase in profits or even income. Tesla has made less money even though it has delivered more cars. This is mostly because it has cut prices to boost sales and the costs of making new products have gone up.

    Also, Tesla warns in its Q4 and annual earnings reports that it is “between two major growth waves” right now. Tesla has had more success in recent years thanks to the Model Y and Model 3. However, the company says that the growth of its vehicle sales “may be notably lower” in 2024 because it is getting ready to start a new vehicle platform on which it plans to build a smaller electric vehicle that costs around $25,000.

    During trade after the market closed, shares dropped 5.8% to $195.60.

    The $25,000 Tesla EV

    CEO Elon Musk said on a call Wednesday that the company’s factory in Texas will start making that smaller, cheaper EV in late 2025. He said that’s the only place that will work “because we really need the engineers to be living on the line.”

    Musk says that production of the small EV will then move to a plant in Mexico that hasn’t been built yet. Senior vice president of powertrain and energy engineering for the company, Drew Baglino, later said again that the company “wants to first demonstrate success with the next-generation platform in Austin before we start construction” in Mexico. Based on those words, it looks like work won’t start on the factory in Mexico until 2026.

    Musk said that the company hopes to find a third factory outside of North America by the end of 2024. This will be the second factory in Mexico that will start making the smaller next-generation EV.

    Musk said that the new platform includes a “tremendous amount of new revolutionary manufacturing technology.”

    https://twitter.com/TechCrunch/status/1750281289633071318

    Operating Income Goes Down

    According to generally accepted accounting principles, Tesla had a net income of $7.9 billion in the fourth quarter. This is a very large number that includes a one-time non-cash tax gain of $5.9 billion for the release of valuation allowance on certain deferred tax assets.

    The company’s running income and earnings after adjustments give a better picture of how well it is doing financially.

    In the fourth quarter, Tesla’s total income was $2.06 billion, which is 47% less than the same time last year. Tesla says that its so-called “Full Self-Driving” software led to higher running costs, which were mostly caused by AI and other research and development projects. The cost of the Cybertruck production ramp also hurt the results. Tesla spent $1.1 billion on R&D in the fourth quarter, which is 35% more than the same time last year.

    On the bright side, Tesla said that it has had lower costs per vehicle thanks to things like lower costs for raw materials, the Inflation Reduction Act credit, and more sales of cars. All of these things have helped close the profit gap.

    The company made $3.9 billion after adjustments, which is 27% less than the same time last year.

    Tesla was able to get back some of the best margins in the auto business in the fourth quarter, in part because it worked hard to cut costs even more.

    When regulatory credits are taken out, the company’s car gross margins were 17.2%. It’s the first quarterly rise since Tesla started cutting prices a lot last year. In the story, Tesla also said that it has reached the “natural limit” of how much it can lower the prices of its current cars. “Over time, we expect our profits from hardware to be accompanied by faster profits from AI, software, and fleets,” the company wrote.

    While sales kept going up, they did so more slowly than Tesla has seen in the past.

    The business said it made $25.17 billion in Q4, which is 3% more than the same time last year. The numbers were just a little below what analysts had predicted. Yahoo Finance data shows that analysts thought the business would make about $25.62 billion in sales in the fourth quarter of 2023.

    Tesla’s Business That Stores Energy Grows

    In 2024, Tesla was cautious about the growth of its car business. However, the company is still optimistic about the growth of its energy storage business. There were 125% more storage installations in 2015 than in 2016, even though the fourth quarter was slower.

    Read More: Tesla Will Start Sending Out Cyber Trucks, and the Price Will Start at $60,990

    So important to Tesla’s business is this area that the company will start putting out deployment numbers along with its regular quarterly reports on car production and delivery, Baglino said on the call.

    Musk said, “I’ve said for many years that the storage business will grow much faster than the car business, and it is.”

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