Tesla experienced its first annual delivery decline on Thursday, as the electric vehicle manufacturer distributed fewer vehicles than anticipated in the fourth quarter. Additionally, incentives failed to stimulate demand for its ageing range of models. Throughout 2024, Tesla consistently missed its quarterly delivery targets.
For 2024, Tesla delivered 1.79 million vehicles, marking a 1.1% decrease compared to the previous year and falling short of the projected 1.806 million units, based on a poll of 19 analysts by LSEG. In the quarter ending December 31, Tesla delivered 495,570 vehicles, missing the expected 503,269 units as per a survey of 15 LSEG analysts. Specifically, the company delivered 471,930 Model 3 and Model Y vehicles, alongside 23,640 units of other models, including the Model S sedan, Cybertruck, and Model X premium SUV. Production for the October-December period totalled 459,445 vehicles.
Before the market opened, Tesla’s shares dropped by 3.5%, reflecting investor concerns over the hurdles facing CEO Elon Musk. Musk had projected that promotions, including zero-interest financing, would drive a “slight growth” in deliveries for 2024. Despite this recent dip, Tesla’s stock has surged over 60% in the past year, reaching new peaks following the US presidential election and boosting Musk’s net worth beyond $400 billion.
Tesla is under pressure from reduced European subsidies, a US market shift towards more affordable hybrid vehicles, and intensified competition from China’s leading EV manufacturer, BYD. In 2024, Tesla reported a series of disappointing quarterly earnings, with price reductions and the introduction of a new truck failing to attract sufficient customers.
Nevertheless, investor sentiment remains positive, partly due to Musk’s strong ties with President-elect Donald Trump. Some Tesla owners have expressed regret over their purchases following Musk’s shift to more hard-right positions, feeling embarrassed to drive the electric vehicles. Meanwhile, Musk has threatened to resign from the company after a prolonged legal dispute over his compensation. A judge twice dismissed the proposed $56 billion pay package as excessive, despite shareholder approval.
In response to declining sales, Elon Musk redirected Tesla’s strategy toward self-driving taxi services and made significant campaign donations to Donald Trump, contributing nearly a quarter of a billion dollars in the hope of obtaining regulatory advantages for the company.
However, with fully autonomous driving technology still several years away, analysts indicate that Tesla will need to depend on more affordable versions of its current models and the Cybertruck to stimulate sales growth in the near term. The Cybertruck, notable for its trapezoidal stainless-steel exterior, has been experiencing signs of weakening demand, according to experts.
Meanwhile, Tesla’s vehicle registrations in Europe for October dropped by 24%, largely due to intense competition from the Volkswagen Group. Volkswagen’s Skoda Enyaq SUV has overtaken Tesla’s Model Y as the best-selling electric vehicle in the region, based on data from research firm Jato Dynamics.
Last year, Tesla reduced the prices of several models to compete with BYD and other manufacturers, which pressured its profit margins on vehicle sales. Despite this, Wall Street expects demand to rebound in 2025 as the US Federal Reserve is projected to lower interest rates.
