After losing 65% of its value in 2022, this has turned out to be a good year for Tesla (TSLA) investors, as the stock has more than doubled in 2023. Tesla’s year-to-date price action looks remarkable when viewed in the context of the bloodbath in startup electric vehicle (EV) companies and dismal returns from legacy automakers.

Meanwhile, despite the stellar rally in 2023, Tesla stock is still trading below its 2021 record highs, when its market cap surpassed $1.2 trillion. That year, the Elon Musk-run company became the first automaker (a classification that Tesla bulls disagree with) to have a market cap above $1 trillion. Tesla is still the world’s most highly valued automaker, with a market cap of over $809 billion. For context, that's over 2.5x the market cap of Toyota Motors (TM) – the world’s largest automaker by global vehicle sales.

Tesla stock has had a good run since late 2019, when it talked about sustainable profits and also unveiled its Cybertruck. The stock rose over 740% in 2020, and another 50% in 2021. It did crash in 2022 amid the broad-based sell-off in growth stocks, which was arguably made worse by Musk’s antics after the Twitter (now X) acquisition.

As the year draws to a close, here’s a look back at Tesla’s 2023 performance, as well as the stock's 2024 forecast.

Tesla Outperformed EV Stocks in 2023

Usually, EV stocks tend to move in tandem. For instance, there was a spectacular rally in EV stocks in 2020, while the entire pack sold off in 2022. However, there was a divergence in the group's price action this year. While many EV stocks fell to record lows, Tesla continued its upward momentum.

That said, 2023 did not start on a positive note for Tesla, as the company missed delivery estimates for Q4 2022 and continued cutting its prices. It has almost become a norm for Tesla to cut car prices after a delivery miss, including after the Q3 2023 delivery report. Meanwhile, Tesla’s price war led to a deterioration in its profit margins, and its operating margins have fallen gradually to hit 8% in the most recent quarter.

One of the reasons TSLA shares rallied in 2023 was because the company reiterated its preeminence in the EV industry, with most other companies struggling to cope amid slower-than-expected demand and spiraling losses. Tesla has established itself as the de facto industry standard in the U.S., as multiple automakers - including legacy Detroit icons like Ford (F) and General Motors (GM), as well as startup EV names like Rivian (RIVN) and Polestar (PSNY) - adopted its charging standard and partnered to share its sprawling network of Superchargers.

Tesla Misses “Full Self Driving” Deadline Yet Again in 2023

Another key development for Tesla in 2023 was the commencement of Cybertruck deliveries, after missing previous delivery deadlines. The pickup model opened to a mixed reception, as the final price and specifications were not what Tesla initially touted.

However, Musk's prediction that Tesla’s self-driving software would become fully autonomous by the end of 2023 turned out to be premature - and so far, it looks like it was yet another false “end of the year” prophesy that Musk has made multiple times previously also.

Tesla Stock 2024 Forecast: Analysts Are Not Too Bullish

Analysts are not too bullish on Tesla heading into 2024, given that its mean target price of $237.68 is below current prices. That said, it’s quite common for Tesla to trade above its mean target price, and the stock has done so multiple times over the last few years.

Overall, Wall Street analysts have given it a “Moderate Buy” rating, and only 8 of the 27 analysts covering Tesla rate it as a “Strong Buy” while 2 as a “Moderate Buy.”

What Factors Could Drive Tesla Stock in 2024?

The macro environment will play a part in Tesla’s 2024 price action, and a soft landing for the U.S. economy - coupled with the expected rate cuts by the Fed - could help propel the stock higher. There are, however, some other key factors that investors will need to watch. These include:

• Delivery guidance: During Tesla’s Q3 2023 earnings call, Musk admitted that its deliveries might not rise at a CAGR of more than 50% over the long term as it had previously predicted. Tesla’s 2024 delivery guidance and the progression in its deliveries, including that of Cybertruck, could drive the stock next year.
• Operating margins: While markets were somewhat forgiving of Tesla’s margin compression in 2023, things might change if the company’s margins continue to fall – especially if it is not accompanied by any significant incremental rise in deliveries.
• Lauch of new models: Tesla might also announce new models, including the long-awaited low-cost platform.
• Full autonomy: Markets will also look for commentary on the full autonomy of Tesla’s self-driving software as it looks set to miss the milestone in 2023, as well.
• Elon Musk’s antics: Most important, perhaps, will be Musk’s antics, especially as the U.S. shifts into election mode. That said, and as I noted previously, despite the multiple controversies, Musk remains the best bet to steer Tesla.

To sum it up, with a supportive macro environment, Tesla could reclaim its trillion-dollar status in 2024 –  and for that matter, so could Meta Platforms (META), whose share price has risen to a two-year high amid the Santa Claus rally.