Tesla is facing significant hurdles as it heads toward the end of 2023, with fresh challenges for both sales and production metrics. On December 4, it was reported by expert Troy Teslike, who closely monitors Tesla's performance, about the company's uneven global sales picture: strong numbers are coming out of China, but the U.S. and Europe are not faring as well. According to Teslike, sales in the U.S. are anticipated to drop by over 30,000 units, similarly echoed by European sales data. While it's true China is expected to increase sales by more than 48,000 units, it's clear the overall growth may be stymied due to lackluster performances elsewhere.
The outlook for Tesla’s production is equally concerning. A planned three-day production halt for the Cybertruck, set to happen this month, indicates problems with oversupply and inventory issues. Production pauses are usually not good omens for car manufacturers, especially for one like Tesla, known for its ambitious growth targets. With such production disruptions, analysts worry about how this could diminish overall delivery numbers for the company as it attempts to hit its ambitious target of 514,926 vehicle deliveries by the end of December. Achieving this would mean Tesla needs to break its previous quarter's record of delivering over 500,000 EVs within three months, which it has never accomplished before.
The disappointment doesn't stop there for Tesla. Not only are deliveries declining, but last quarter, the company reported 462,890 vehicles delivered, marking only marginal growth year-over-year at 6.4%. This slight increase doesn't mask the fact there were drops of 8.5% and 4.8% year-on-year during the first and second quarters of 2023, respectively. The continuing dip from the European market, where registrations dropped over 20% due to competition and other factors, is particularly troubling. Without the substantial strides from China,Tesla’s global numbers could look considerably bleak.
Adding to the mix of troubling news for Tesla, the much-anticipated Cybertruck is under scrutiny. Although there are claims of two million pre-orders for the Cybertruck, about 1.95 million of those come from individuals who merely placed orders with little intent to follow through, primarily due to the modest $100 initial deposit. The hesitation extends to concerns over production and pre-release excitement, particularly as there have already been recalls for the Cybertruck’s 2024 model, affecting customer confidence. With sales projections set for about 250,000 annually to keep Tesla secure, and the realization of potential mistakes earlier on, the future for this iconic vehicle seems rocky.
Simultaneously, Tesla’s status took another hit when it was named the “deadliest car brand” according to research published by iSeeCars.com, based on fatal accident rates per mile traveled. The data revealed Tesla vehicles at about 5.6 fatal accidents per billion miles, closely followed by Kia and other brands. Critics suggest this rate could reflect consumer behavior rather than inherent vehicle safety flaws, noting many Tesla models have received positive safety ratings. iSeeCars analyst Karl Brauer reassured the public, stressing driver alertness is more significant than the vehicle’s build. The company’s official stance maintains the responsibility rests with drivers, emphasizing the need for responsible usage among consumers.
Adding to Elon Musk's woes, he faces legal challenges and the potential loss of his previously promised stock options tied to Tesla's performance. Recent rulings have restricted Musk's potential stock grant, which could have led to significant financial gains for the billionaire. If the downward trend for deliveries and presumed sales materializes, this could create backlash among Tesla shareholders. There's already snowballing tension between Musk's strategies and investor interests, particularly as he previously negotiated stringent terms with shareholders concerning stock grants, hinting to leave if left unsatisfied with incentives.
Shareholders are nerve-wracked, especially with Tesla's stocks closing at $351.42 after dipping 1.6% on December 3. Year-to-date numbers seem positive, with shares rising 41.5%, but the shaky foundation underneath those numbers raises concerns about sustainability. Analyst ratings seem to show optimism with consensus ratings labeled as “Buy,” yet with highest price targets recently projected at $411 and average ratings hovering around $339, there appears to be simultaneous pressure building from multiple directions.
Looking forward, the Cybertruck is expected to face additional challenges as it gets closer to its launch. Talks of low production forecasts and non-existent sales outside North American markets keep analysts on staff at Tesla concerned. With the inaugural deliveries slated just before the new year, the orbits of production ramp-up and sales are clouded with skepticism. It is unlikely for the electric truck to catch fire, especially within the broader market realities.
So, what does all this suggest for Tesla moving forward? Can Elon Musk pivot and maneuver through these recent changes and external pressures? With the countdown to year-end just around the corner, the next few weeks will be pivotal for the car company, its products, and its founder’s future ambitions. All hinges critically on how well the team can respond to its 2024 production and sales hurdles, and how quickly measures can be put to prevent the company from falling below expectations.
