Worried Tesla expects sales growth to slow. And here's the plan to fight it

Tesla is facing a slew of challenges in 2024, ranging from obstacles in increasing the scale of production to the possibility of sales growth tapering down through the course of the 12 months this year. And even as competition in the electric vehicle (EV) space heats intensifies, the going may get tougher still.

Tesla is looking at manufacturing its next-generation of EVs at its Texas facility from the second half of 2025. This is primarily because of the number of newer technologies that are being planned for incorporation. According to Tesla CEO Elon Musk himself, the transition will take a while. And this comes at a time when demand for EVs is likely to slow down marginally.

Tesla reported shrinking fourth-quarter gross margin and has predicted lower sales growth than previously calculated. As per Wall Street estimates, the company will manage to sell around 2.2 million EVs which may be around 21 per cent up from figures from 2023 but still much lower than the long-term target of 50 per cent. And margins may come down as well with rivals playing a very aggressive price game in major EV markets like China and the United States.

Rise of the Chinese EV players

China's BYD recently overtook Tesla in the final quarter of 2023, in terms of production. It is well poised to maintain its lead. A major factor working in its favour is that while it played a very strong game within China, it has now been spreading its wings in several key markets abroad as well. The pressure is being applied and Tesla is facing the heat.

Musk himself recently admitted that Chinese carmakers will manage to play far bigger outside of China. "If there are no trade barriers established, they will pretty much demolish most other car companies in the world."

The strategy for Tesla

Tesla may be forced to keep waging price wars in a bid to keep rivals at bay. Then there are reports of successful models like Model 3 and Model Y receiving crucial updates which could potentially increase demand and bolster the overall outlook.

Tesla is also looking at entering newer markets, including India. The company is also aiming at having more manufacturing facitilies across the world which could help it plug any possibility of slowing production.