Tesla delivered more EVs than ever, but still missed projection because of Chinese EVs

Tesla managed to deliver a record 462,890 electric vehicles (EVs) in the third quarter of 2024, marking a 6.4 per cent increase from the previous quarter. However, despite this achievement, the figure fell just short of their projected target of 469,828 vehicles, which ultimately led to their investors feeling disappointed.

This in turn led to a 3 per cent drop in Tesla’s stock, as analysts expressed concerns about the increasing challenges Tesla faces, particularly from competitors in China and Europe.

Rising competition from China & Europe

One of the biggest hurdles for Tesla in recent quarters has been the aggressive expansion of Chinese automakers like BYD and Xpeng. Supported by local government subsidies, these companies have been able to offer competitively priced EVs, rapidly scaling their production.

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While Tesla did deliver more battery electric vehicles (BEVs) than BYD in the third quarter, with BYD’s BEV sales reaching 443,426 units, the Chinese company’s emphasis on plug-in hybrid vehicles has seen a sharp rise. BYD’s plug-in hybrid deliveries surged by over 75 per cent during this period, helping the company gain significant ground in the world’s largest auto market.

This intensifying competition in China, combined with softening consumer demand, has put pressure on Tesla’s performance in the region.

In Europe, Tesla has been losing market share as well, with local automakers beginning to outperform the American giant. For the first time, BMW overtook Tesla in European BEV sales in July 2024. Tesla has traditionally enjoyed strong sales in Europe, but the emergence of well-established European brands in the EV market has changed the landscape.

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These domestic companies, often backed by government incentives and offering products tailored to local preferences, are gradually eroding Tesla’s lead.

A critical fourth quarter ahead

To meet its 2024 target of 1.81 million vehicle deliveries, Tesla will need to deliver a record 516,344 vehicles in the fourth quarter alone. If the company falls short, it risks reporting its first-ever annual decline in deliveries, a significant milestone that could dampen investor confidence.

Tesla’s profit margins have already taken a hit due to price cuts and incentives aimed at boosting sales. These moves, though necessary to stay competitive, have squeezed profits at a time when the company is also contending with rising production costs and economic uncertainties.

Tesla’s plans for robotaxis and AI

In response to these challenges, Tesla is focusing on its technological innovations. The company is set to unveil its much-anticipated robotaxi product on 10 October at an event in Los Angeles.

This AI-powered autonomous vehicle could represent a shift in Tesla’s strategy, moving away from relying solely on EV sales and embracing cutting-edge autonomous technology. CEO Elon Musk has long promoted the idea of fully autonomous driving, and the robotaxi launch is seen as a key step in realising that vision.

As Tesla moves towards this new phase, the company hopes to solidify its leadership in both the EV and AI markets. However, with mounting competition and high expectations, the pressure is on Tesla to prove that it can continue to innovate while maintaining its competitive edge.