Jan 2 (Reuters) – (This Jan 2. story has been corrected to change the Tesla vehicle delivery number to 484,507 in paragraph 2 and to clarify that BYD is the top EV maker by sales in paragraph 1)
Tesla (TSLA.O) delivered a record number of electric vehicles in the fourth quarter, beating market estimates and meeting its 2023 goal, but lost its spot as the top EV maker by sales to China’s BYD (002594.SZ).
Tesla delivered 484,507 EVs in the October-to-December period, falling short of the 526,409 vehicles that Warren Buffett-backed BYD handed over – mostly in China – showing that car buyers were looking for cheaper models in a high-interest-rate economy.
While the U.S. automaker’s year-end sales push mostly paid off, helping it deliver 1.8 million vehicles this year, it fell short of CEO Elon Musk’s ambitious 2 million annual internal goal.
However, it is still ahead of BYD for the whole year. The Chinese company delivered a total of 3.02 million vehicles, including about 1.4 million plug-in hybrid EVs.
Tesla stock, which doubled last year, was nearly flat on Tuesday in a generally weaker market.
BYD’s deliveries show price cuts are working for the Chinese company, said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“The fight will hurt margins for both companies, but BYD clearly believes it’s a price worth paying to increase market share and recognition,” she added.
Tesla increased discounts and offered incentives like six months of free fast charging if customers took deliveries by December-end, in a bid to boost sales before some variants of its compact Model 3 car lose U.S. federal tax credits in 2024.
That helped it post a growth of 11% over the immediately previous quarter and higher than expectations of 473,253, according to 14 analysts polled by LSEG.
It made a record 494,989 cars in the quarter after a production halt in the third quarter to upgrade assembly lines, taking total production in 2023 to 1.85 million units.
On Wednesday, China Passenger Car Association (CPCA) figures showed Tesla sold 94,139 China-made electric vehicles (EVs) in December, up 68.7% from a year earlier.
Tesla’s delivery numbers are “much, much, much better than domestic U.S. car companies,” said Gary Bradshaw, portfolio manager at Tesla shareholder Hodges Capital.
Smaller rival Rivian (RIVN.O) also reported deliveries on Tuesday, with the company missing market estimates amid a wider pullback in EV demand.
The weakness has led U.S. automakers including Ford (F.N) and General Motors (GM.N) to become more careful about their EV production capacity plans.
Tesla is also facing scrutiny from regulators over its self-driving technology with the company recalling more than 2 million cars last month to install new safeguards in its Autopilot advanced driver-assistance system, after a federal safety regulator cited safety concerns.
Consumer Reports — an important U.S. non-profit group that conducts extensive reviews of cars, kitchen appliances and other goods — said its preliminary evaluation suggests the software update to fix issues were not sufficient and did not go far enough to prevent misuse and driver inattention.
Some analysts said Tesla could have to continue the price cuts it started in January last year to keep demand, after the end of the tax incentives under the Inflation Reduction Act (IRA) brought forward sales into the fourth quarter.
“Tesla may have to cut prices further, especially for a vehicle like the versions of the Model 3 that lost their tax credit,” said Seth Goldstein, equity strategist at Morningstar.
The rear-wheel drive and long-range variants of Tesla’s Model 3 no longer have federal tax credits of $7,500 this year as updated rules on battery material sourcing kick in, under the IRA.
Goldstein, however, said that most of the price cuts were in response to higher interest rates by the U.S. Federal Reserve so Tesla may keep prices if borrowing costs start coming down.
Model 3 cars and Model Y sports utility vehicles accounted for 461,538 deliveries in the quarter, while Tesla turned over about 23,000 units of its other models.
Tesla did not reveal if the deliveries included the new