Tesla expects a big sales spurt in the first quarter of 2023 to secure what is likely its biggest year yet.
In the past, Tesla has routinely relied on quarter-end and especially year-end sales to meet its targets.
However, the company has adopted a new strategy for 2023 to meet production and sales targets and is ready to do so at any cost.
In its Investor Shareholder Deck for the fourth quarter and full year 2022, Tesla stated that it would accelerate its cost-cutting roadmap and sacrifice its high profit margins for an accelerated production rate and higher sales:
“In the near term, we are accelerating our roadmap to reduce costs and strive for higher production rates while we remain focused on executing the next phase of our roadmap.”
Tesla put its money into action by significantly cutting prices in many markets, most notably China and the United States, in early January.
In the past, Tesla has used strategies like rebates, free supercharging, and other incentives to boost sales, and this is one of the rare instances when it uses practices early in a quarter to boost sales.
Tesla technically missed its 2022 delivery targets, which are set for 50 percent year-over-year growth. After delivering 936,172 cars in 2021, Tesla would have technically needed 1,404,258 deliveries last year to hit its production target. With 1,313,851 vehicles delivered in 2022, Tesla missed its target by almost 100,000 units.
The automaker is pulling out all the stops to keep up with its production targets, including boosting demand through price cuts. The target of 1.8 million vehicles by 2023 will be required 4,932 cars are built every daywhat is feasible in reality. With Shanghai and Fremont operating at full capacity and rumors of the California plant expanding, Tesla is already on the right track.
Additionally, Berlin and Texas are both ramping up production, and the Cybertruck will add some volume in Austin. However, CEO Elon Musk confirmed that serial production of the pickup will not begin until next year.
Tesla Cybertruck goes into limited production this summer
In reality, Musk might want more. On the earnings call, he said Tesla could produce more than 1.8 million units:
“Well, ok. I mean, our internal production potential is actually closer to 2 million vehicles, but we said 1.8 million because, I don’t know, there always seems to be some damn force majeure somewhere on earth. And we have no control over whether there are earthquakes, tsunamis, wars, pandemics, etc. So if it’s actually a smooth year without major supply chain disruptions or massive problems, we actually have the potential to make 2 million cars this year.”
The commitment to increasing demand and sacrificing margins by slashing prices is a key indicator that Tesla is poised to start 2023 with a hot start rather than waiting until quarters end. While demand already seemed relatively healthy, the price cuts improved Tesla’s addressable market, particularly with its mass-market Model 3 and Model Y vehicles.
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Tesla is banking on a big Q1 push to secure its biggest year yet
