Annual deliveries for automaker Tesla fell for the first time in years, sending its share price down by more than 6% in early trading hours.
By 9:57 am, the stock had regained some of the losses, and was down by 3.61%.
The company reported 495,570 deliveries for Q4 of 2024, falling short of analysts’ expectations of 504,770.
Annual deliveries dropped to 1.79 million, a slight decline from 1.81 million in 2023, marking the company’s first annual drop in years.
459,445 vehicles were produced in Q4, bringing Tesla’s annual production to 1.77 million units for 2024.
Tesla delivery numbers miss estimates
Analysts surveyed by StreetAccount had anticipated higher Q4 delivery numbers, with a consensus of 504,770 vehicles, largely driven by strong expectations for Tesla’s popular Model 3 and Model Y.
Independent Tesla researcher Troy Teslike predicted 501,000 deliveries.
However, Tesla’s reported numbers revealed a shortfall, signalling softer-than-expected demand despite significant price cuts and buyer incentives.
Tesla stock faces a volatile year
Tesla shares experienced a rollercoaster year in 2024. The stock soared 63% by year-end, recovering from a 29% plunge in the first quarter, its worst quarterly performance since 2022.
While a late-year rally saw Tesla shares hit a record high, challenges such as declining deliveries, pricing pressure, and Elon Musk’s involvement in politics raised questions about the company’s focus.
Did Musk’s political involvements distract him?
Elon Musk’s high-profile involvement in President-elect Donald Trump’s election campaign, contributing $277 million to Republican candidates, became a significant talking point in 2024.
Musk’s new role as co-leader of Trump’s advisory group tasked with cutting federal spending and regulations sparked concerns about whether his political foray might distract him from Tesla’s core operations.
Auto Forecast Solutions Vice President Sam Fiorani told CNBC that Musk’s entry into politics could have “pulled his focus away from his core business” though the impact may not be reflected in the company’s numbers until Q1 2025.”
Chinese and European carmakers increased competition for Tesla
Tesla’s dominance in the EV market faced headwinds in 2024 as competitors like BYD, Ford, and Hyundai gained traction.
In Europe, Tesla’s sales dropped 14% year-on-year through November, with November registrations falling from 31,810 in 2023 to 18,786 in 2024 as European auto giants BMW and Volkswagen upped their game.
In China, Tesla struggled to keep pace with the broader EV market’s 8% growth, with Model Y sales rising just 5%.
Meanwhile, BYD and other Chinese brands such as Chery, Li Auto, Jetour, LeapMotor, and Aito significantly outpaced Tesla’s growth.
BYD has also been expanding aggressively by establishing manufacturing plants outside China and ramping up its exports.
Patrick George, editor in chief of InsideEVs, told CNBC that he thinks Tesla still does many things better than any other EV maker, especially when it comes to its charging network.
But Tesla’s biggest operational challenge in the latest quarter was “the nuts-and-bolts job of being a car company.”
Cybertruck challenges and inventory buildup
The much-anticipated Cybertruck, which debuted in late 2024, faced hurdles as Tesla grappled with production inefficiencies and rising inventory.
Workers on the Cybertruck assembly line were temporarily sent home during Q4, indicating potential efforts to prevent oversupply.
George said that Tesla made a mistake not bringing “more affordable EVs in 2024,” and added that the Cybertrucks are “piling up on used car lots.”
The angular steel Cybertruck starts at around $80,000.
Way ahead for Tesla
Despite challenges abroad, Tesla maintained dominance in North America.
Aggressive price cuts and incentives boosted sales, particularly for the Model Y SUV.
However, these measures came at the cost of thinner margins and a buildup of unsold inventory.
In a bid to regain momentum, Tesla aims to launch lower-cost and autonomous EVs in 2025.
Musk projected 20%-30% growth over 2024, driven by advancements in autonomous technology and increased production of affordable models.
While Tesla remains a leader in EV innovation, growing competition, operational challenges, and external distractions could shape the company’s trajectory in the years to come.
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