Tesla needs to win over everyday buyers for its next phase of growth

The two models that have accounted for about 97% of the company’s deliveries — the Model 3 and Model Y — were first launched in 2017 and 2020

Tesla vehicles at the company's Californian factory. 

Tesla is expected to say on Tuesday that it had another record delivery year in 2023, in large part due to Elon Musk fans and tech-savvy early adopters. Now it is working to widen its appeal.

The electric car maker is estimated to have made almost 483,200 vehicles in the fourth quarter, according to analysts. That means Tesla probably exceeded its goal to deliver 1.8m cars last year, an all-time high for the company but just a fraction of what Toyota or General Motors normally sell.

For its next phase of growth, Tesla has to win over everyday buyers, who primarily select vehicles based on price and ease of use.

The Musk-led company faces a number of hurdles to reach that crowd: Inflation and high interest rates have made consumers more cautious about big purchases. Additionally, plenty of buyers still wonder about safety, and if there are enough charging stations. Those who do decide to make the switch from petrol cars also have an ever-expanding pool of electric cars to pick from, besides Tesla.

In another challenge, some of Tesla’s models are expected to lose the full, $7,500 (€6,790) US federal electric car tax credit thanks to stricter battery-component sourcing rules from China. The company’s website says some versions of the Model 3 will be affected.

Tesla took some steps to break into the mass market in 2023. It slashed prices across its lineup, sacrificing profit margins for volumes. The markdowns were especially pronounced in China, the market where Musk has said it’s most difficult to compete.

However, the car maker will likely still be surpassed by China’s BYD, which has a much fresher lineup. Tesla’s newest vehicle, the futuristic-looking Cybertruck, still hasn’t reached volume production and is at least a year away from profitability, Mr Musk said in October. Tesla probably made between 200 and 5,000 Cybertrucks in the quarter, analysts estimated.

Tesla has yet to give guidance for how many vehicles it expects to deliver in 2024. The two models that have accounted for about 97% of the company’s deliveries in 2023 — the Model 3 and Model Y — first launched in 2017 and 2020.

• Bloomberg