For the first time in at least nine years, Tesla’s global annual sales have recorded a decline, dropping by 1.1 per cent compared to 2023. The electric vehicle (EV) giant delivered 1.79 million vehicles in 2024, a slight decrease from the 1.81 million sold the previous year.
A 2.3 per cent hike in fourth-quarter sales, reaching 495,570 vehicles, was insufficient to offset a sluggish start to the year, despite incentives like 0 per cent financing, free charging, and affordable lease options.
This decline is primarily attributed to waning demand for electric vehicles in the US and other markets. Analysts suggest that many early adopters have already purchased EVs, while mainstream buyers remain cautious about factors such as driving range, price, and access to charging stations for longer trips.
Fourth quarter sales fall short of expectations
Tesla’s fourth-quarter sales also fell short of Wall Street estimates, with analysts expecting 498,000 deliveries. Production figures revealed similar challenges, with 459,445 vehicles produced in the quarter and 1.77 million for the year, both falling slightly below the year’s total deliveries.
Adding to Tesla’s concerns, the average sales price of its vehicles is estimated to have dropped to just over $41,000 in the fourth quarter, the lowest in at least four years, according to analysts polled by FactSet. This pricing pressure, coupled with once-unheard-of discounts, has weighed on Tesla’s industry-leading profit margins.
The dip in sales challenges Tesla’s 2022 prediction of 50 per cent annual growth, as the company faces an ageing model lineup and increased competition from legacy automakers and startups in China, Europe, and the US. Nearly all of Tesla’s sales came from its smaller, more affordable Models 3 and Y, with just 23,640 deliveries of its higher-end Model X, Model S, and the new Cybertruck.
Tussle with rival companies
Meanwhile, Chinese rival BYD is closing in on Tesla’s lead as the world’s top EV seller, reporting a 41 per cent increase in sales to 1.77 million EVs in 2024. Tesla narrowly maintained its edge, but the competition underscores the mounting pressure on the Austin, Texas-based company.
Tesla shares dropped nearly 7 per cent on Thursday following the announcement. However, the stock remains up more than 50 per cent over the past year, driven partly by optimism surrounding Tesla’s advancements in AI-powered autonomous driving technology and the prospect of regulatory easing under Donald Trump’s re-election.
Divided outlook
Industry analysts remain divided on Tesla’s outlook. Daniel Ives of Wedbush remains bullish, “We have never viewed Tesla simply as a car company…instead we have always viewed Musk and Tesla as a leading disruptive technology global player,” he said in a report, adding, “and the first part of this grand strategic vision has taken shape.”
William Stein, an analyst at Truist Securities, told news agency AP, that Tesla will struggle to sell vehicles in future months and expects further discounting used to boost sales will weigh on its financial results.
Tesla’s fourth-quarter earnings report, scheduled for 29 January, will be closely watched by investors and analysts seeking clarity on how the company plans to navigate intensifying competition and demand challenges in the evolving EV market.
