Tesla, led by Elon Musk, shifts focus to everyday buyers following success with electric vehicle enthusiasts.

Tesla Inc. is anticipated to announce on Tuesday that it achieved another record-breaking year in 2023, largely thanks to devoted Elon Musk enthusiasts and tech-savvy early adopters. Currently, the company is striving to expand its customer base. Analysts surveyed by Bloomberg estimate that the Austin-based electric vehicle (EV) manufacturer delivered approximately 483,200 vehicles in the fourth quarter. This suggests that Tesla likely surpassed its target of delivering 1.8 million cars last year, which is a historic milestone for the company but still only a small portion of the typical sales volume of Toyota Motor Corp. or General Motors Co.

For its next phase of growth, Tesla needs to win over everyday buyers who choose vehicles primarily based on price and ease of use. “When you look at car buying in general, we’re trying to get to the next adoption of electric cars,” CFO Vaibhav Taneja said on an investor call in October.

Musk’s company faces a number of obstacles to reaching that crowd: Inflation and high interest rates have made consumers more wary of big purchases. In addition, many buyers still wonder about safety and the adequacy of charging points. For those who decide to switch from gasoline-powered cars, there is an ever-growing selection of electric cars in addition to Tesla.

In another challenge, on Jan. 1, some Tesla models are expected to lose the full $7,500 federal electric car tax credit due to China’s stricter sourcing rules for battery components. The company’s website says that this affects some Model 3 versions.

Tesla took some steps to break into the mass market in 2023. It lowered prices across its lineup and sacrificed profit margins for volumes. The discounts were particularly strong in China, a market Musk has said is the most difficult to compete in.

However, the EV maker will likely still overtake China’s BYD Co., which has a much fresher lineup. Tesla’s latest vehicle, the futuristic-looking Cybertruck, still hasn’t reached volume production and is at least a year away from profitability, Musk said in October. Analysts estimate the automaker likely delivered between 200 and 5,000 Cybertrucks during the quarter.

Tesla has yet to provide guidance on how many vehicles it plans to deliver in 2024. The two models that have accounted for about 97% of the company’s deliveries this year — the Model 3 sedan and the Model Y sport utility vehicle — were first launched in 2017 and 2020, respectively.

“We struggle to see how underlying demand is likely to materially improve as the lineup continues to age and the price is not continually reduced amid increasing competition from EVs,” said Toni Sacconaghi, a Bernstein analyst with a sell rating. of Tesla stock, wrote in a research note to clients this week. “Equally important, we don’t see the situation improving in 2025.”

Tesla has a few levers to pull to increase sales in the future. It revamped its Model 3 sedan this year, giving it a sleeker look and a longer range. It first offered the vehicle in China before going on sale in Europe, and the new Model 3 is expected to arrive in the US in 2024, although Tesla has not confirmed the timing. In addition, the company is reportedly planning to release a new version of the Model Y from the Shanghai factory.

Tesla is also expanding its marketing efforts. Tesla has built a huge brand without paying for traditional advertising, but it has recently started experimenting with Google ads. The now released model has the option to rent the Model Y for $399 per month.

Owuraka Koney, CEO of Jennison Associates, which owns a stake in Tesla, said he believes the electric vehicle maker is doing a lot to reach the next wave of potential customers.

Cybertruck attracts curious buyers to Tesla showrooms. In addition, he said Tesla executives besides Musk, such as chief engineering officer Franz von Holzhausen and Lars Moravy, vice president of vehicle technology, are speaking more on behalf of the company to market Tesla’s products.

“If you look at global EV sales, BYD and Tesla are still the main volume drivers,” Koney said. “Tesla will continue to be in a good position.”