RM Tesla’s U.S. Sales Plunge to Near Four-Year Low in November, Despite Cheaper Models

Tesla’s U.S. sales plummeted to their lowest point in nearly four years in November, despite the automaker’s introduction of lower-priced versions of its popular electric vehicles (EVs). According to exclusive data from Cox Automotive shared with Reuters, Tesla’s sales dropped nearly 23% year-over-year, falling to 39,800 vehicles from 51,513 in the same month last year. This marks the lowest monthly sales since January 2022.

The introduction of more affordable variants of its Model 3 sedan and Model Y SUV was seen as a potential strategy to offset the drop in demand, following the expiration of the $7,500 federal tax credit for EVs at the end of September. The new Standard versions, priced around $5,000 lower than the previous base models, were expected to boost sales. However, this plan appears to have backfired, as demand for these models failed to meet expectations.

Stephanie Valdez Streaty, Cox’s Director of Industry Insights, noted that the decline in sales highlights a broader demand issue, with Standard models not receiving the anticipated market response. Furthermore, these more affordable variants appear to be cannibalizing sales of the higher-end versions, particularly the Model 3.

While Tesla’s market share has increased to 56.7% from 43.1% in November, the broader EV market experienced a significant downturn, with total U.S. EV sales falling by over 41%. Despite the challenges, Tesla continues to dominate the market, but experts are concerned about the company’s future growth prospects.

After years of strong sales, Tesla saw its deliveries dip last year due to a combination of high borrowing costs, consumer uncertainty, and increasing competition, particularly from European and Chinese automakers introducing new and lower-priced models. Deliveries are expected to drop further this year, with no new major vehicle launches from Tesla since the Cybertruck, which has yet to gain significant traction in the market. The rest of Tesla’s fleet consists of aging models, with only minor updates.

Cox’s Streaty warns that Tesla faces a significant challenge in 2024, as several competitors plan to release more affordable and feature-rich electric vehicles. She stressed that the key to Tesla’s survival and continued success lies in the introduction of entirely new models.

In response to the slump in demand, Tesla has begun offering financing deals with interest rates as low as 0% for its Standard Model Y. While such offers are common during the holiday season, industry observers believe the fact that Tesla is offering such deals on newly released models signals weak demand. Both the Standard Model Y and Model 3 are also being listed at discounted prices on Tesla’s website.

Shawn Campbell, an adviser at Camelthorn Investments, stated, “If demand were strong, Tesla wouldn’t need to offer 0% financing.” He believes that in order to resolve the demand issue, Tesla must introduce fresh, new models to its lineup.

Despite these challenges, Tesla has yet to comment on the sales data, as it continues to navigate an increasingly competitive and volatile market.