Tesla is poised to announce another record-breaking quarter for electric vehicle (EV) deliveries, although it is anticipated to fall below CEO Elon Musk's ambitious target of 2 million annual deliveries set at the beginning of the year.

Despite confronting a deceleration in sales, Tesla capitalised on its leading profit margins and implemented price reductions across its four car models globally in 2023. This strategic move focused particularly on China, where the company faced intensified competition from local players like BYD.

The ongoing price war, coupled with a sluggish demand for electric vehicles, prompted automakers like Ford Motor to recalibrate their electrification plans. However, Tesla emerged as the indisputable leader in the United States, causing its stock to more than double this year.

Garrett Nelson, a senior analyst at CFRA Research, noted, "The fourth quarter is typically the strongest of the year in terms of deliveries for Tesla; we're expecting that to be the case again this year."

Analysts polled by LSEG predict that Tesla likely delivered 1.82 million vehicles globally in 2023, showcasing a 37 per cent increase from the previous year, with approximately 473,000 units in the fourth quarter. The official figures are expected to be reported as early as Tuesday.

In January, Musk expressed optimism about achieving the 2 million deliveries target for the year, conditional on avoiding any unforeseen obstacles. However, in October, he cautioned that higher borrowing costs were putting pressure on demand.

While Tesla engaged in a year-end sales push with increased discounts, the company has expressed its commitment to achieving a 50 per cent average annual growth rate over several years.

As the EV market leader enters 2024, it faces challenges such as the expiration of federal tax credits for some of its cars in the United States and the premature end of Germany's EV subsidy program. This might necessitate additional price cuts next year, even as interest rates and battery ingredient costs are expected to ease.

Jairam Nathan, an analyst at Daiwa Capital Markets, adjusted his estimate for Tesla's deliveries in 2024 to 2.04 million from 2.14 million, projecting a 4 per cent decline in average revenue per car compared to 2023.

Tesla is also contending with increased regulatory scrutiny of its self-driving systems in the U.S. and certain European countries. A recent recall of nearly all 2 million vehicles on U.S. roads was initiated to install new safeguards.

Looking ahead, analysts foresee 2024 presenting challenges for Tesla, including the ongoing production ramp-up of the Cybertruck and the launch of a more affordable car platform. Musk has acknowledged the "enormous challenges" in achieving volume production for the Cybertruck, expected to represent only 3 per cent of Tesla's volumes in 2024, according to RBC Capital Markets analyst Tom Narayan.

Despite these hurdles, investors remain watchful, expecting Tesla to navigate these challenges as it continues to shape the future of electric vehicles.

(With Reuters inputs.)