Vehicles at a Tesla store in Colma, California, US, on Wednesday, Dec. 13, 2023. Tesla Inc. will fix more than 2 million vehicles, its biggest recall ever, after the top US auto-safety regulator determined its driver-assistance system Autopilot doesn't do enough to guard against misuse. Photographer: David Paul Morris/Bloomberg via Getty Images
New York CNN  — 

Tesla reported record quarterly sales in the final three months of last year, but it wasn’t enough for it to hang onto its title as the world’s largest maker of electric vehicles.

The company reported global sales of 484,507 vehicles in the fourth quarter, a bit better than expected and up nearly 20% from what it sold in the same period of 2022. It was less than the 526,409 EVs sold by Chinese automaker BYD, but Tesla stayed ahead of BYD in total full-year sales. BYD vehicles are sold in Asia and Europe but are not yet available in North America.

Tesla is facing greater competition from not just BYD, but from established global automakers that are increasing their EV offerings and capacity.

Telsa’s near 20% growth is down from the higher growth rate earlier this year that gave it a 38% gain for the year. And that annual growth rate is well below the 50% annual growth target set by Tesla.

But the pace of growth in demand for EVs from consumers appears to be slowing for all brands, not just Tesla. Some of the legacy automakers, such as Ford and General Motors, have pulled back EV production in the near term, even though they’ve announced plans to shift from traditional gasoline-powered vehicles to EVs in the years ahead.

The EV market has seen pockets of strength, most notably in Norway, where the Norwegian Road Federation reported Tuesday that 82% of nationwide sales in 2023 were electric vehicles, up from 79% in 2022. Traditional gasoline powered cars made up less than 4% of sales in Norway last year.

But the group said economic uncertainty and tight finances reduced overall vehicle sales there by 8%, with the number of EVs sold falling nearly 5%, despite the gain in market share.

Tesla was once again the best selling automaker in Norway last year with a 20% share of the market, up from a 12% share of the market in 2022. The gains came despite a dispute between Tesla and unions in Norway, Sweden and other Nordic countries, which has snarled deliveries of Teslas to Sweden and could cause additional problems going forward for the nonunion automaker.

Tesla has responded to the growing competition and higher interest rates that have driven up the cost of ownership by cutting prices of its vehicles, a move that has kept sales increasing but has squeezed its profit margins.

Tesla also faces a headwind in that some of its vehicles, including some of its Model 3’s, have lost the full $7,500 federal tax credit as of Monday that had been available to many US buyers. There are limits to the tax credit for EVs using Chinese batteries or materials, even if the cars are assembled in a US factory. There are also limits on the tax credits for high-income buyers.

Tesla also faced some difficult headlines in recent months, including a recall ordered on 2 million cars, virtually all of the vehicles it had produced for the US, due to a federal regulator’s findings that its Autodrive feature posed a safety threat because it could be used away from the highways on which it is designed to be engaged.

Tesla CEO Elon Musk has also generated controversy this year for his comments and tweets, such one retweet claiming that Jewish communities push “hatred against Whites.” But while those controversies caused advertisers to flee X, the social media platform he owns formerly known at Twitter, it’s not clear that what impact, if any, it has had on Tesla sales.

The sales growth at Tesla is a good sign for the company according to Dan Ives, an analyst with Wedbush Securities who is a bull on Tesla shares.

“This was a clear win for [Tesla CEO Elon] Musk and Tesla as hitting 1.8 million vehicles for 2023 was a major achievement in a choppy macro for EVs,” he wrote in a note to clients Tuesday.

Tesla did not break out the sales of its Cybertruck, lumping it in with the luxury Model S and Model X as “other models” in the sales report. It started deliveries of the long-delayed pickup on November 30, but Musk has warned investors it will take more than a year to ramp up production of the truck.

The company is late to the game in bringing an electric pickup to market, trailing offerings from Ford, GM and upstart Rivian. While Ford and GM have yet to report fourth quarter sales, Rivian reported it delivered just under 14,000 trucks in the quarter, up 73% from a year ago, and about 50,000 for the year, up 147%.

Shares of Tesla were little changed in morning trading on the slightly better-than-expected sales news Tuesday. Tesla shares doubled in 2023, recapturing just over half the losses they suffered in 2022. But they’re down 15% from their 52-week high reached in July, and they lost 5% in just the closing days of December trading.