US EV powerhouse Tesla reported a 3% on-year increase in its Q4 2023 revenue, missing analyst expectations and marking its slowest pace of growth in over three years.

According to its earnings report on Wednesday, revenue in the last quarter of 2023 rose to $25.17 billion, lower than the $25.6 billion figure anticipated by analysts. Revenue growth from its over 484,000 vehicle sales rose only 1% in the period.

Meanwhile, its Q4 operating margin fell to 8.2% due to price cuts, higher R&D spending and costs associated with the Cybertruck production ramp-up, Kallanish notes.

Despite posting net profit growth of 19% on-year in 2023 (GAAP) at $15 billion, Tesla seemed to have failed to impress investors. Following the report’s release after close of day Wednesday, Tesla’s shares fell over 8% in premarket trading on Thursday.

At the time of writing, shares were 9.16% down at $188.80 each. The company’s market capitalisation was around $590.82 billion. Some analysts predict that Tesla could see up to $50 billion wiped off its valuation if the loss holds.

Tesla executives told analysts in a call on Wednesday that the company expects a lower volume growth this year as it focuses on the launch of the next-generation vehicle. Previously, the company said it anticipated a compound annual growth rate of 50% on car production and sales.

“As we have said in our prior guidance, there will be periods where we won’t be growing at the same rate as before. We are between two major growth waves,” comments chief financial officer Vaibhav Taneja. “The first one began with the global expansion of Model 3 and Y, and we believe the next one will be initiated with the next generation platform.”

Chief executive officer Elon said the “low-cost vehicle,” to start production in the second half of 2025, will have a “profound” and “revolutionary” design and manufacturing system. Production will take place at its Texas gigafactory.

Having reached a global production run rate of nearly 2 million vehicles/year in Q4, Tesla now says it will focus on improving its “customer education” to boost vehicle demand. “We are being creative in figuring out ways to bring in new customers and educate them about the benefits of owning a Tesla versus gas-powered vehicles,” says Taneja.