Tesla deliveries beat estimates as year-end sales push pays off

A Tesla Cybertruck is on display at Tesla in Buena Park, Calif. on Sunday Dec. 3, 2023. (AP Photo/Richard Vogel)

Tesla beat estimates for fourth-quarter deliveries on Tuesday after a push to hand over more Model 3 electric cars before some variants of the compact sedan lose federal tax credits in the New Year under the Inflation Reduction Act (IRA).

The world's most valuable automaker delivered a record number of vehicles in the fourth quarter and hit its 2023 target of 1.8 million, helped by increasing discounts on key models.

The end of the tax incentives on some models was expected to bring sales forward into the fourth quarter, weighing on deliveries this year, analysts had said.

The rear-wheel drive and long-range variants of Tesla's Model 3 compact sedan no longer have federal tax credits of $7,500 this year as updated requirements on battery material sourcing kick in, under the IRA.

The company handed 484,507 vehicles in the last three months of the year, compared with estimates of 473,253 units, according to 14 analysts polled by LSEG.

Fourth-quarter deliveries were about 11% higher than the third quarter, during which upgrades to assembly lines to make the updated Model 3 mass-market sedan hurt some production.

Tesla, which is set to report fourth-quarter results on Jan. 24 after markets close, delivered 461,538 Model 3 cars and Model Y sports utility vehicles, while it handed over about 23,000 units of its other models.

The newly launched and radically designed Cybertruck is expected to be a small fraction of Tesla's deliveries this year. Musk said in October the company aims to produce about quarter of a million units of the electric pickup truck in 2025.

The company said it expects to deliver 2.2 million vehicles this year, or an increase of about 22%, but slower than the growth of about 38% in 2023.

Rivian Automotive also reported quarterly deliveries on Tuesday, with the company missing market estimates.

(Reporting by Akash Sriram in Bengaluru; editing by Shounak Dasgupta)