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Tesla continues to sputter as the company fell short of its stated target of increasing yearly deliveries by 50% or more last year.
The electric vehicle manufacturer reported on Monday it delivered 1.31 million vehicles in 2022, an increase of nearly 40% from 2021. To reach its initial objective of increasing deliveries by at least 50%, Tesla would have had to deliver more than 1.4 million vehicles. The miss comes despite Tesla’s discounts of $7,500 to American customers who accepted delivery in the final days of December in an effort to reduce inventory.
Missed expectations
Tesla previously said as early as October it wouldn’t meet its sales target, and Wall Street adjusted its expectations accordingly, expecting deliveries of 1.34 million units last year, not the 1.31 million units it reported. According to Tesla, the miss is due to changes in the way the automaker manufactures and delivers cars to customers resulted in more than 34,000 remaining in transit to their final locations at the end of the year.
As could be expected, Wall Street reacted negatively to the news.
Tesla shares recovered some of their lost ground, rising to $123.18 at year’s end from a low of $108.72 on Dec. 28. That’s hardly good news, as the stock lost 65% of its value in 2022. But Tesla’s year-end delivery miss brought out the bears, and the stock slumped more than 10% in early trading Tuesday, plunging to less than $111 a share.
The tumbling stock price has led Musk’s personal wealth tumble some $200 billion to $137 billion.
Whatever the reason for the miss, the company is also seeing a slump in demand for its vehicles, which resulted in the company offering a $7,500 year-end discount. The move comes as Musk’s $44 billion acquisition of Twitter last year angered some potential Tesla customers and upset many investors as the CEO has sold more than $39 billion worth of stock to fund the transaction.
Weakening demand
But the weakening stock price also represents another reality. As rivals catch up to Tesla’s leadership in electric vehicles, the basis of its high valuation no longer exists. But rather than ensure Tesla’s leadership in electric vehicles, Musk has become preoccupied with Twitter.
All of this is weighing on another one-time Tesla strength: its resale value.
According to Reuters, used Tesla prices are dropping more quickly than those of other automakers, with vehicles remaining on dealer lots for a longer period of time. In November, the typical cost of a used Tesla was $55,754, a 17% drop from a peak price of $67,297 in July.
In contrast, the used automobile market as a whole had a 4% decline during that time, according to Edmunds. And preowned Teslas remained in dealer inventory for 50 days on average in November, compared with an industry average of 38 days for the overall used car market.
The decline is due to a number of outside factors beyond Musk’s control. Fuel prices are declining, interest rates are rising as is Tesla production. And the number of competing EVs is rapidly expanding. This is causing used Tesla price declines that are outpacing the market, which in turn impacts the pricing power on new Teslas.
Tesla’s two biggest markets remain the United States and China, where the Model 3 sedan and Model Y crossover accounted for 95% of sales in 2022.
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