Tesla exceeded expectations for fourth-quarter deliveries in 2023, attributing the success to a concerted effort to expedite the handover of Model 3 electric cars before certain variants lost federal tax credits. This urgency was prompted by the impending expiration of tax incentives under the Inflation Reduction Act (IRA), compelling Tesla to ramp up deliveries before the New Year.

As a result, the electric vehicle giant achieved a milestone, delivering a record number of vehicles in the fourth quarter and meeting its ambitious target of 1.8 million deliveries for the entire year. This accomplishment was facilitated by strategic discounts on key models, which played a pivotal role in stimulating demand.

Analysts had previously anticipated a slowdown in deliveries due to the conclusion of tax incentives on specific models. The rear-wheel drive and long-range variants of Tesla’s Model 3 compact sedan no longer qualified for the $7,500 federal tax credits, as updated IRA requirements related to battery material sourcing came into effect.

During the last three months of the year, Tesla handed over an impressive 484,507 vehicles, surpassing the estimated 473,253 units predicted by 14 analysts polled by LSEG. This represented an 11% increase compared to the third quarter, where production had been hampered by upgrades to assembly lines for the updated Model 3 mass-market sedan.

The breakdown of deliveries revealed that Tesla delivered 461,538 units of its popular Model 3 cars and Model Y sports utility vehicles, while the remaining 23,000 units comprised other models in the company’s lineup. Notably, the newly launched Cybertruck, with its radical design, is expected to contribute only a small fraction to Tesla’s overall deliveries in the coming year. Elon Musk had previously stated in October that the company aims to produce approximately a quarter of a million units of the electric pickup truck by 2025.

Looking ahead, Tesla remains optimistic about its performance in the electric vehicle market. The company has set an ambitious target of delivering 2.2 million vehicles in the upcoming year, signifying a 22% increase. While this growth is substantial, it is notably slower than the remarkable 38% expansion experienced in 2023. The market will be closely watching as Tesla is set to report its fourth-quarter results on January 24, after the closure of markets.

In contrast, rival electric vehicle manufacturer Rivian Automotive reported quarterly deliveries on the same day but fell short of market estimates, highlighting the competitive dynamics within the rapidly evolving electric vehicle landscape.

Source: Reuters