• Tesla's sales could grow 20% YoY to 25% YoY in 2024, lower than the 30% or 40% levels seen in previous years.
• Launch of Tesla’s compact sub-$25,000 car in 2025 has the potential to increase the company’s delivery growth rate.
• Deployment of Tesla’s solar panels and energy storage units expected to surge in 2024.

Tesla’s Q4 2023 revenue rose 3% YoY to reach $25 billion, helped by a 20% YoY jump in EV deliveries which reached 484,507 units during the quarter. Tesla’s EV deliveries totaled more than 1.8 million units for full-year 2023.

Although Tesla achieved substantial EV deliveries in Q4 2023, the company was surpassed by BYD Auto as the global EV leader for the quarter. BYD sold more than 526,000 EVs in Q4 2023. The US remained Tesla’s primary market, with China and Europe following closely behind.

However, the Austin, Texas-based automaker’s gross profit declined 23% YoY in Q4 2023 due to the consistent reduction in vehicle prices through the year.

During the Q4 2023 earnings call, Tesla CEO Elon Musk discussed a few key topics like the company’s next-gen vehicle platform, new factory location and FSD beta V12.

Next-gen vehicle platform

CEO: “Our company is currently between two major growth waves: the first one began with the global expansion of the Model 3/Y platform and the next one we believe will be initiated by the global expansion of the next-generation vehicle platform. In 2024, our vehicle volume growth rate may be notably lower than the growth rate achieved in 2023, as our teams work on the launch of the next-generation vehicle at Gigafactory Texas.…”

Abhik Mukherjee’s analyst take: “In 2023, Tesla witnessed a substantial 38% YoY growth in vehicle deliveries as it maintained demand through multiple price reductions throughout the year. As Tesla approaches the cost reduction limit for its current lineup, it is expected that the company’s delivery growth rates in 2024 may not reach the 30% or 40% levels seen in previous years. Market participants were rattled by CEO Elon Musk’s bleak forecast for 2024, causing Tesla’s stock to tumble as much as 12% following the earnings call in late January.”
“Currently, Tesla is focusing on the production of its next-generation compact vehicle, slated to commence in 2025. The launch of this compact sub-$25,000 car has the potential to increase Tesla's delivery growth rate.”

Autonomy (FSD Beta V12):

CEO: “For full self-driving, we've released Version 12, which is a complete architectural rewrite compared to prior versions. This is end-to-end artificial intelligence. So, another bit nets basically photons in and controls out…."

Abhik Mukherjee’s analyst take: “Over the past few quarters, Tesla has strongly emphasized on AI, neural net and quantum computing. Tesla has substituted the traditional hard coding of FSD with neural net in the FSD beta V12. This latest development indicates that Tesla has achieved AI-driven self-driving capabilities with the FSD beta V12, allowing the system to react based on real-time data learning. This is a significant breakthrough for the auto industry. It is expected that like the widespread adoption of Tesla NACS, traditional and new automakers in the EV space might be collaborating with Tesla for FSD licensing which will generate additional revenue opportunities for the company."

Financial highlights:

In Q4 2023, Tesla’s Automotive sector revenue increased marginally by 1% YoY to around $21.5 billion, despite a nearly 20% YoY rise in vehicle deliveries. The primary factor constraining revenue growth was the reduced ASP of the Model Y and Model 3 in China and the US.

Income from other ventures such as energy storage deployment, charging networks, and additional services rose 20% YoY to reach $3.6 billion. During Q4 2023, Tesla successfully installed 41 MW of solar panels and deployed 3.2 GWh of energy storage.

During the quarter, Tesla’s gross profit amounted to $4.4 billion, marking a 23% YoY decline. The company’s overall gross profit for the year 2023 declined by 15% YoY as it reduced the prices of its vehicles multiple times and recorded lower-than-expected FSD revenue.

Outlook:

Tesla did not specify any target for total vehicle sales in 2024 but has indicated a lower growth compared to 2023. Considering the prevailing market conditions, it is anticipated that Tesla's sales could grow 20% YoY to 25% YoY in 2024 to reach 2.2 million to 2.3 million units.

While the growth rate for vehicle sales may not match previous levels, there is an expectation of a substantial surge in the deployment of solar panels and energy storage units for Tesla in 2024.