Tesla became the most valuable automaker in the world promising unmatched sales growth. But in the face of growing EV sales by rival brands, Tesla Wednesday backed off its former bullish sales targets.

Tesla has been cutting prices for more than a year to boost sales in the face of greater competition. As a result, the company’s 2023 deliveries were up 38% on the previous year. While that might sound like a big jump, the company previously said it was looking for a 50% annual growth rate when averaged over the course of several years.

On Wednesday it warned its “growth rate may be notably lower” in 2024 than it was last year. Tesla (TSLA) shares dropped 7.5% in premarket trade Thursday.

The fourth quarter marked the first time that the company lost the lead in global EV sales to Chinese automaker BYD.

CEO Elon Musk told analysts on a call that Chinese carmakers are “the most competitive car companies in the world” and “will have significant success outside of China.”

The remarks come as BYD, backed by Warren Buffett, has not only conquered its home turf, but is also making inroads into other markets. It pledged in December to open a factory in Hungary, its first production plant for passenger cars in Europe.

The BYD TANG EV and the BYD HAN EV are displayed during an exhibition test drive as the Chinese electric-vehicle producer announces its expansion to the consumer market next year in Mexico, in Toluca, Mexico, on November 29, 2022.

Rising competition from BYD and other Chinese automakers has sparked an anti-dumping investigation by EU officials that could lead to the imposition of higher tariffs. And Musk — who once scoffed at Chinese EV brands — believes they now pose an existential threat.

“Frankly, I think if there are not trade barriers established, they will pretty much demolish most other car companies in the world,” Musk said.

Tesla’s 50% sales growth target has been a key factor in driving the stock higher and making the company the most valuable automaker on the planet, despite it delivering far fewer vehicles than more established automakers.

The company said its slower growth rate would come as “our teams work on the launch of the next-generation vehicle.”

That next-generation vehicle, likely a lower-priced model, has yet to be unveiled by the company and Tesla vehicles frequently face delays before hitting the market.

The company warned that the ramp up of its most recent vehicle, the long-delayed Cybertruck pickup that went into production at the end of 2023, “to be longer than other models given its manufacturing complexity.” Musk said three months ago that it could take more than a year for the Cybertruck to be profitable for the company.

20 March 2023, Brandenburg, Gr’nheide: An employee of the Tesla Gigafactory Berlin Brandenburg works on a production line of a Model Y electric vehicle. The Tesla plant was opened and put into operation on March 22, 2022. In the meantime, about 10,000 people are employed there. Photo by: Patrick Pleul/picture-alliance/dpa/AP Images

The new growth target came as part of an overall disappointing earnings report. Tesla reported adjusted earning of 71 cents a share, just short of the 74 cents a share forecast by analysts surveyed by Refinitiv, but down 40% from a year earlier.

It was the second straight quarter the the company fell short of earnings forecasts, following a string of better-than-expected earnings reports that had stretched back to the start of 2021.

Revenue in the quarter came in at $25.2 billion, up only 3% from a year earlier despite the bigger rise in deliveries, and a sign of the impact of lower average sales price in the wake of its repeated price cuts. Revenue also came in below forecasts of $25.6 billion. Shares were down 5% in after-hours trading.