Tesla aims to see slight growth in deliveries in 2024 compared to last year, thanks to generous incentives for its electric vehicles – but much depends on the success of the new Cybertruck pickup, which is showing signs of weakness, analysts said .
After years of rapid growth, Tesla will deliver a record 1.81 million vehicles in 2023. But increasing competition and an aging lineup have hit the electric vehicle market leader hard, as consumers, of Faced with high financing costs, they choose less expensive hybrids over battery-powered vehicles.
Chief Executive Elon Musk is betting on plans for a robotaxi business to revive Tesla’s fortunes, while his ally President-elect Donald Trump is expected to overcome regulatory hurdles. But analysts say the technology is still years away and Musk’s goal of 20-30% sales growth next year is based on the promise of a cheaper version of current cars and the success of the Cybertruck.
The truck’s higher-than-expected price and a design that’s been called polarizing — a trapezoidal stainless steel exterior meant to stand out in a fiercely competitive market — are keeping buyers at bay, said Sam Fiorani, vice president of research firm AutoForecast Solutions.
“Unfortunately, full-size truck buyers are a pretty conservative audience,” he said. “They are not having as strong a success as initial expectations.”
Tesla cut prices on its vehicles last year to stimulate demand, sparking an industry-wide price war.
This year, the company has focused on offering attractive incentives, including low-cost financing offers for Model 3 sedans and Model Y SUVs, as well as lower lease prices.
Tesla also offered three months of free fast charging and Full Self-Driving, its advanced driver assistance software, for all new orders delivered by December 31.
However, data from S&P Global Mobility showed that Tesla’s U.S. registrations fell to about 500,000 vehicles in late October, a decline of about 7% from the previous period. The decline was partly due to a 32 percent decline in Model 3 registrations and a 24 percent decline in Model S luxury sedans.
Tesla doesn’t break out Cybertruck sales — but S&P data shows U.S. registrations of the pickup fell to 4,335 in September and 4,039 in October, from 5,428 in August. As of October, the total was 31,451 units. Bernstein analysts expect 50,000 by the end of the year.
“The Cybertruck isn’t doing enough to push the brand up,” said Tom Libby, S&P Global Mobility’s associate director for industry analysis.
Tesla is expected to report in early January that it delivered 1.81 million vehicles in 2024, which would be flat compared to the 2023 figure, according to analysts polled by LSEG.
INDICATIONS OF WEAKING DEMAND
In 2019, Musk said the Cybertruck would be priced at $40,000. In 2023, it said it would attract 1 million bookings. But late last year, after several delays, the launch edition of the Foundation Series truck hit a price tag of $120,000 each.
Two versions currently available for sale are the Cyberbeast at nearly $100,000 and an all-wheel drive at around $75,000.
Tesla has also stopped taking reservations, instead allowing buyers to place orders directly. Some Cybertrucks are even available in its inventory for immediate delivery — moves that analysts say suggest a demand problem.
The company also began offering the Cybertruck on lease starting at $999 per month in November, before slashing the price to $899 per month.
“When you see these types of offers, they’re basically an indication of softening demand,” S&P’s Libby said. But he said it’s too early to conclude that there is a long-term demand challenge.
Tesla did not respond to a request for comment.
Supply and demand for the Cybertruck is being closely monitored by Tesla investors and fans, as Musk has poured resources into its development, but said the company could face “tremendous challenges” in ramping up production and making positive cash flow.
The Cybertruck is also piling up on used car lots — a red flag, according to industry executives.
Used Cybertrucks are taking about 75 days on average to sell after being listed on CarGurus, an online marketplace for buyers and sellers of new and used cars, compared to an average of about 27 days in May.
“The number of days of waiting is getting longer and the price is coming down, and I can tell the sales volume is down,” said Kevin Roberts, director of economic and market intelligence at CarGurus.
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