Tesla Achieved a Record Number of Car Deliveries in the Fourth Quarter, but China’s Byd Surpassed Them to Claim the Top Spot in the Electric Vehicle (EV) Market

In the fourth quarter, Tesla achieved a record-breaking number of electric vehicle (EV) deliveries, surpassing market expectations and meeting its 2023 target. However, it relinquished its position as the top EV maker to China’s BYD. Tesla delivered 494,989 EVs in the October-to-December period, falling short of the 526,409 vehicles delivered by BYD, primarily in China.

While Tesla’s year-end sales efforts helped it achieve a total of 1.8 million vehicle deliveries for the year, it fell short of CEO Elon Musk’s ambitious internal target of 2 million annual deliveries. Despite this, Tesla maintained its lead over BYD for the entire year, as the Chinese firm delivered a total of 3.02 million vehicles, including around 1.4 million plug-in hybrid EVs.

To boost sales before certain variants of its compact Model 3 sedan lose U.S. federal tax credits in 2024, Tesla increased discounts and offered incentives, such as six months of free fast charging for deliveries by the end of December. This strategy contributed to a growth of 11% over the previous quarter, exceeding estimates.

Tesla’s production in the quarter reached a record 494,989 vehicles, bringing the total production for 2023 to 1.85 million units. While smaller rival Rivian reported deliveries on the same day, it missed market estimates amid a broader decline in EV demand.

Analysts noted that Tesla might need to continue its price cuts initiated in January of the previous year to sustain demand after the end of tax incentives under the Inflation Reduction Act (IRA) accelerated sales into the fourth quarter. Some variants of Tesla’s Model 3, like the rear-wheel drive and long-range versions, no longer qualify for federal tax credits in 2024 due to updated requirements on battery material sourcing under the IRA.

Despite its impressive delivery numbers, Tesla is under scrutiny from regulators for its self-driving technology, prompting a recall of over 2 million vehicles to install new safeguards in its Autopilot system. Consumer Reports raised concerns about the software update, suggesting it might not be sufficient to prevent misuse and driver inattention.