Elon Musk Expects Tesla Vehicle Sales Growth In 2024
One of the big surprises this year so far was Tesla’s Q1 sales dropping year over year. Tesla said for a long time its goal was 50% growth year over year. Yes, Elon Musk and crew also qualified that to say it wasn’t expected to be steady growth and some years would be up more than others. But negative growth is a far way away from 50% growth.
Along with the drop in sales, Elon Musk said a few months ago that Tesla wasn’t going to give any guidance on what they expect in 2024. That’s right — breaking from tradition, it was up to everyone else to guess how many vehicles Tesla was hoping to sell in 2024. Unsurprisingly, that didn’t sit super well with the investment community and a lot of money left the stock.
On today’s Tesla conference call regarding 1st quarter numbers, based on the Q1 performance, Musk was asked if Tesla sales would drop in all of 2024 year over year. He responded that, no, they do expect sales growth. That was the extent of it, though. We didn’t get any specific number Tesla is targeting or expecting.
Though, a little more was said about why sales were down in the 1st quarter. “We experienced numerous challenges in Q1, from the Red Sea conflict and the arson attack at Gigafactory Berlin, to the gradual ramp of the updated Model 3 in Fremont,” the Tesla shareholder letter stated. Those things were also mentioned on the conference call, along with comments about production being significantly greater than deliveries due to what are essentially logistics issues and that there was demand for certain models in some regions where Tesla couldn’t get them while those models were in oversupply elsewhere.
There’s also the matter of sales being down in China, and Musk commented that Tesla’s competitors’ sales were down more, but there was no discussion as to why sales would go up again in China. “Production at Gigafactory Shanghai was down sequentially due to seasonality and planned shutdowns around Chinese New Year in Q1. Demand typically improves throughout the year,” Tesla writes. But the Chinese New Year was in the first quarter last year, too. “As we enter new markets, such as Chile, many of them will be supplied from Gigafactory Shanghai,” the company added.
Overall, this graph captures changes in Tesla’s market share by major market region:
As you can see, Tesla’s market share was down everywhere — slightly down, but down nonetheless. And, actually, it was in the US and Canada where it was down the most. On that matter, Tesla writes, “Model 3 production in Fremont was down sequentially as we changed the production line to the updated model. Sequentially, Model Y production at Gigafactory Texas increased to an all-time high, while COGS per unit improved to an all-time low.”
Then there’s Europe. Here’s Tesla’s short explanation for why sales were down in Europe: “Model Y production in Berlin was down sequentially due to impacts from the Red Sea conflict and the arson attack that impacted the factory. Despite idle capacity charges and other costs from production disruptions, COGS per unit continued to decline sequentially.” So, there’s that.
On the shareholder conference call today, the executives mentioned a couple of times how it was just “one thing after another” and a perfect storm of various issues around the world that hurt Tesla’s sales.
There have been other signs that there’s more going on than all that. There were multiple price cuts, there’s been much more marketing and advertising, and then there were of course all of the layoffs. There’s also been some research out there on some portions of the public losing interest in Tesla vehicles. But the official word for now is that Q1 sales suffered due to a bunch of logistics issues and that 2024 sales should be higher than 2023 sales — that’s the expectation at Tesla, at least. What do you think?
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