It also posted sales and profit in the fourth quarter that missed analysts' expectations while its gross margin declined.

The electric vehicle maker cut prices and offered incentives last year to boost demand.

Tesla said lower raw material costs and U.S. government credits helped lower cost-per-vehicle, but Cybertruck production and AI and other research projects increased costs.

After years of breakneck growth, Tesla is dealing with softening demand for electric vehicles and intensifying competition from rivals including BYD.

The Chinese company which has a less expensive and more varied lineup became the top EV maker by sales in the fourth quarter.

Reuters earlier reported that Tesla has told suppliers it wants to start production of a new mass-market electric vehicle, code-named "Redwood" in mid-2025, likely a compact crossover.

The company only said Wednesday that volume growth may be notably lower than the rate achieved last year as its teams work on the launch of the next-generation car.

Shares of Tesla fell three percent in after-hours trading.