Tesla Inc (NASDAQ:TSLA) has posted its first annual sales drop since it listed, with increased competition and waning demand for electric vehicles (EVs) weighing on its 2024 results.
The company delivered 1.79 million vehicles over the year, a 1% decline from 2023 – a first-time lag on a previous year’s total for the company. As a comparison, Tesla shifted 1.809 million units in 2023, up from 1.3 million in 2022.
Despite a record fourth quarter with 495,570 deliveries, Tesla missed Wall Street expectations of 512,277 for the period.
Turbulent year
Tesla faced a turbulent year with external challenges such as an arson attack on its Berlin factory, shipping delays and an industry-wide slowdown.
Internal cost-cutting measures, including a 10% workforce reduction in April, further highlighted the strain on the company’s operations.
In the US, political developments are adding uncertainty.
Incoming President Donald Trump has been critical of EV subsidies and may reduce or eliminate the US$7,500 tax credit that has supported the sector – notwithstanding his close personal relationship with Tesla boss Elon Musk, whose own interest in the EV thematic waned over 2024.
Conversely, potential loosening of regulations around self-driving technology could benefit Tesla’s robotaxi ambitions, which are viewed as the new 'golden goose' for the auto giant.
International competition pressures mount
Tesla’s dominance in the EV market is also under increasing threat from Chinese automakers like BYD and legacy automakers such as General Motors, Ford, Volkswagen and Hyundai.
BYD, Tesla’s closest competitor, outpaced the company in fourth-quarter EV sales, delivering 595,413 units compared to Tesla’s 495,570.
For the full year, Tesla narrowly retained its title as the world’s largest EV maker, selling 24,000 more vehicles than BYD’s 1.76 million.
The broader EV industry is currently under pressure, with demand growth slowing globally.
Tesla has responded by slashing prices in key markets, including the United States and China, to maintain its competitive edge.
While Tesla remains more profitable than its legacy rivals, analysts highlight its “ageing product lineup” and stiff competition as challenges to future growth.
Mixed fourth-quarter performance
The Model 3 and Model Y accounted for the bulk of Tesla’s deliveries in the fourth quarter, with 471,930 units sold.
However, its “other models” category, which includes the Model X, S and Cybertruck, contributed just 23,640 deliveries.
Tesla’s highly anticipated Cybertruck made headlines for safety concerns following the recent fatal explosion in Las Vegas – outside a Trump-owned hotel – which the company attributed to external factors unrelated to the vehicle.
Looking ahead
Despite the challenges, Tesla CEO Elon Musk seems optimistic – on paper, at least.
Musk projected 20-30% growth for 2025, fuelled by the launch of a more affordable vehicle and advancements in autonomous technology.
But analysts remain sceptical, pointing to the need for innovation and strong execution amid intensifying competition.
Tesla’s energy division was a bright spot in 2024, deploying a record 31.4 gigawatt-hours of energy storage products, up from 14.7 gigawatt-hours in 2023.
Yet the company’s core EV business will need to overcome some headwinds to maintain its market leadership in the years ahead.
Shares of Tesla closed the year up 68%, largely due to investor optimism following the US election, but fell 6.1% after the sales report.