Tesla fourth-quarter sales rebound after steep price cuts

Tesla sales jumped during the last three months of 2023 after the carmaker slashed prices and customers rushed to take advantage of tax breaks on electric vehicles — provisions that will be harder to come by in 2024.

The company said Tuesday that it sold 484,500 cars in the fourth quarter, up from 435,000 in the third quarter and 405,000 in the fourth quarter of 2022. For the full year, Tesla sold 1.8 million vehicles. The gains put Tesla on track to sell more than 2 million cars in 2024, potentially overtaking established carmakers like Mercedes-benz and Renault.

The rebound in sales during the fourth quarter should help calm investor concerns about whether Tesla can defend its dominance of the market for electric vehicles as it faces increased competition from traditional carmakers.

During the past year, Tesla has lost market share to rivals like General Motors, Hyundai,

Ford Motor Co. and Volkswagen as they introduced more electric vehicles. Tesla accounts for half the electric cars sold in the United States. In 2022, Tesla accounted for two-thirds of the market.

Another electric vehicle maker, Rivian, said Tuesday it sold nearly 14,000 vehicles in the last three months of the year. That number was up substantially from a year earlier but down about 10% from the third quarter.

In China, the largest market for electric cars, Tesla faces intense competition from BYD and other Chinese automakers. BYD sold 526,000 fully electric cars worldwide in the fourth quarter, exceeding Tesla, a milestone that many auto analysts had been expecting given the Chinese company’s rapid growth.

In Europe, Volkswagen and its Audi and Skoda divisions sell more electric vehicles than Tesla, although the Tesla Model Y is by far the bestselling model on the continent, according to data compiled by Schmidt Automotive Research.

In the United States, people interested in buying an electric car had a strong incentive to take delivery before the end of the year because of new rules intended to cut China out of the supply chain.

Tesla had warned on its website that the two least expensive versions of its Model 3 sedan would no longer qualify for $7,500 federal tax credits after Dec. 31. The cars have batteries made in China. Germany and some other European countries have also rolled back subsidies for electric vehicle buyers.

To maintain sales, Tesla cut prices, offering Model 3s on its website for well under $30,000 after factoring in the tax credits. By late December, the number of lower-priced cars listed on the website appeared to have dwindled, suggesting that the strategy had succeeded.

But the price reductions cut into Tesla profits, which fell 44% in the third quarter from a year earlier.

Tesla said it would announce earnings for the fourth quarter of 2023 on Jan. 24.