Tesla Inc. reported fourth-quarter earnings that fell short of expectations and warned of weaker sales growth in 2024 as it builds its next-generation vehicle.

The carmaker didn’t offer a specific delivery target on Wednesday, which is unusual. It’s long pegged its average annual growth at 50 per cent over multiple years. Analysts expect Tesla to sell 2.2 million vehicles this year, roughly 20 per cent more than in 2023.

 “In 2024, our vehicle volume growth rate may be notably lower than the growth rate achieved in 2023 as our teams work on the launch of the next-generation vehicle at Gigafactory Texas,” Tesla said in its shareholder letter. 

The Elon Musk-led company earned 71 cents a share in the fourth quarter of last year, missing the 73-cents-a-share U.S. average estimate. Tesla generated $25.2 billion in revenue, less than the $25.9 billion predicted by Wall Street. 

Tesla shares fell as much as 5.9 per cent in post market trading. The stock was down 2.7 per cent at 4:43 p.m. in New York.

The carmaker has long been working on its next-generation vehicle. A new model would help freshen Tesla’s lineup and could appeal to a new set of customers. Musk has before spoken of a $25,000 Tesla model, which would allow it to push further into the mass market, though the vehicle has yet to materialize.

Tesla spent much of 2023 slashing prices across its lineup, an effort to spur sales volumes as everyday buyers struggled with high interest rates and inflation. That ate into profits. The company’s automotive gross margin, excluding regulatory credits, came to 17.2 per cent for the quarter, far lower than in years past. Still, that’s a slight improvement over last quarter’s 16.3 per cent, which was the lowest in over four years. 

It blamed the lower profitability in the fourth quarter on its price cuts, higher R&D spend and other costs such as the Cybertruck production ramp up.

The EV maker also got a lift from regulatory credits. Revenue from the sale of these credits — used by other automakers to offset greenhouse gas emissions — came to was $433 million, down from the $554 million last quarter.

“Tesla is signaling that the days of 50 per cent or even 30 per cent to 40 per cent growth year-over-year is not going to happen in 2024,” Seth Goldstein, a Morningstar Research analyst, said in an interview. “At a certain point, you can’t cut prices anymore.”