The final 2023 vehicle delivery numbers are in for electric vehicle standout Tesla (TSLA 4.22%). Fourth-quarter deliveries were 484,000 units, totaling 1.8 million for 2023. That's a 38% increase over 2022 deliveries and an 11% bump over Tesla's third-quarter number.
Meanwhile, other EV companies are showing signs that demand has slowed. Tesla's success in the face of its competitors' struggles highlights major obstacles consumers face in adopting EVs and how Tesla could be better positioned to alleviate those concerns.
Here is what the newest delivery results say about Tesla's place in the EV industry and the stock's long-term outlook.
EV competitors are slowing down
Every automotive company was full steam ahead on electrification a couple of years ago, but the momentum has seemingly slowed over the past six months.
Tesla rival Rivian also reported Q4 deliveries. While it more than doubled full-year deliveries compared to 2022, its 13,972 units in Q4 were a 10% decline from its Q3 mark. Meanwhile, legacy automakers began pumping the brakes on their EV businesses in the fall. General Motors announced it was backing down from its near-term goal of 400,000 units by mid-2024. Additionally, Ford Motor Company has halved its 2024 production guidance for its electric pickup truck, the F-150 Lightning.
Against this backdrop, Tesla's 38% growth of such a large number is impressive. Growing large numbers isn't easy. Increasing deliveries from 435,000 in Q3 to 484,000 in Q4 as your competitors slow? It's a solid quarter. Tesla still sold 35 times the vehicles Rivian did in Q4, and unlike Rivian, it grew from the previous quarter.
NASDAQ: TSLA
Key Data Points
What does it all mean? One could argue that broader EV demand may have softened in recent months (more on this below). But rather than all EV companies suffering equally, consumers opted for the most established brand, Tesla. Remember, Tesla delivered not only 38% more units year over year, but that growth is on a whopping 1.3 million deliveries in 2022. One could argue it's harder than growing 20,000 units to 50,000 units. Tesla's 2023 increase was 10 times Rivian's total 2023 deliveries.
The hard numbers tell the story better than the year-over-year percentages.
Tesla answers consumers' concerns better than anyone
The American Automobile Association (AAA) conducted a consumer survey in March 2023. One-in-four U.S. adults stated they would likely purchase an EV for their next vehicle. The leading reason, from 76% of respondents, was a desire to save on fuel costs. Interestingly, the top four objections to EVs were:
- Purchase price.
- Long-term repair costs.
- Range anxiety.
- Lack of charging network.
Someone could reasonably state that falling gas prices have slowed EV adoption. Pump prices are approaching their lowest levels since 2021, which alleviates the No. 1 pain point among those interested in EVs.
Looking through the list of objections, it seems like Tesla is an increasingly easier choice for consumers. The company has aggressively cut its prices throughout 2023, putting more financial pressure on the competition. Younger EV companies like Rivian and Lucid are burning cash, and Ford and General Motors are losing money on EVs. Those spending $40,000 or more on an EV want to feel good about the commitment and longevity of the companies building them.
Are they looking for a charging network? Tesla is the undisputed leader as the only manufacturer with its own mature charging network throughout North America. Many other brands have announced they will begin making vehicles with Tesla's charging port design.
The long-term pitch remains a home run
Tesla faces steep competition in China, but the global opportunity is enormous and leaves a lot of upside for Tesla. The global vehicle fleet is roughly 1.5 billion units, and EVs are still a low-single-digit percentage of that total. Tesla's best sellers by far, the Model 3 and Model Y, don't intersect with North America's most popular segment, which is pickup trucks. The Cybertruck, which recently began its first deliveries, could wedge Tesla into this segment, too.
The longer Tesla's deliveries overwhelmingly outnumber the competition, the better for investors. Tesla is known for having strong brand loyalty, which means many customers adopting Tesla for the first time have a solid chance of buying another one.
The EV industry may be working through a bit of a lull, but it could make Tesla a stronger EV company and a better investment in the long run.
