Demand for Tesla vehicles has exceeded production capacity, said Elon Musk.
Tesla's recent spate of price cuts has created a rather unique problem for the electric vehicle manufacturer: demand for its products is outstripping the automaker's production abilities, reports Automotive News.
CEO Elon Musk shared this information with investors during the recent quarterly earnings call. “We're currently seeing orders at almost twice the rate of production,” said CEO Elon Musk. “We've actually raised the Model Y price a little bit in response to that.” He also said that so far in January, the EV automaker has seen its strongest year-to-date orders ever.
In response to the overwhelming demand, Tesla is anticipating that sales will rise to 1.8 million in 2023. That's considerably more than last year's total figure of 1.31 million vehicles. Musk is confident Tesla will be able to produce and sell approximately two million vehicles, should no problems arise.
The price reductions came as a surprise and saw popular models like the Model 3 and Model Y becoming more affordable than before. The latter, for example, now has a starting MSRP of $53,490. Initially, it was priced at $52,990 but Tesla tacked on $500 in response to the demand. Despite this, the electric crossover now offers more value for money and, importantly, is now eligible for the appealing $7,500 EV tax credit.
Tesla's long-awaited Cybertruck won't contribute much to the automaker's 2023 production forecasts, even though Musk has previously said the electric truck will enter production later this year.
“We do expect production to start sometime this summer. But I always try and downplay the start of production because [the] start of production is always very slow,” said the CEO.
Instead, Musk and Tesla will focus on volume production of the Cybertruck – which will only happen in 2024. With a staggering 1.5 million pre-orders for the all-electric truck, Tesla will have to work hard and ramp up production to meet demand. Whether the automaker is capable of doing so remains to be seen.
Those that are patiently waiting for the Cybertruck will be pleased to know it should be worth the wait. Musk noted the angular EV will boast next-generation semi-autonomous hardware, but will this be enough to fend off attacks from the now densely populated EV truck segment?
The Ford F-150 Lightning, Rivian R1T, Hummer EV, and many more upcoming rivals will give the Cybertruck a run for its money when it eventually arrives.
Speaking to Automotive News, Jessica Caldwell of Edmunds said, “Tesla has made false promises about the Cybertruck before, but if the company has ever needed to ramp up a timeline for an anticipated product, it's now. The Cybertruck almost seems like old news since the company has been talking about it for so long.”
Tesla also shared financial results, with net profits for the fourth quarter pegged at $3.69 billion. A year earlier, Tesla posted Q4 profits of $2.32 billion.
The automaker has startled rivals into creating a plan of action for their own vehicles, with newcomer VinFast announcing it will employ promotional strategies to remain competitive. Lucid, which sells high-end luxury vehicles, is also feeling the pinch and may find it tough to battle Tesla's newly-slashed prices.
Source Credits: Automotive News
Keyword: Tesla Price Cuts Creating A New Problem For The Automaker