Tesla Reports First Fall in Yearly Deliveries, Shares Plunge
Tesla’s Q4 Earnings Miss Estimates, Shares Fall 6%
Tesla, the electric vehicle (EV) maker led by Elon Musk, reported its first decline in yearly deliveries on Thursday, as lucrative year-end incentives failed to lure customers wary of high borrowing costs. The company delivered 495,570 vehicles in the three months to December 31, missing estimates of 503,269 units, according to 15 analysts polled by LSEG.
Challenges Ahead
The US EV maker’s shares closed about 6% lower, with analysts citing reduced European subsidies, a shift in the United States toward lower-priced hybrid vehicles, and tougher competition from China’s BYD. "Lower deliveries reduces Tesla’s growth and lowers the total addressable market for the company’s ancillary services, including autonomous driving software, charging, and insurance," said Morningstar analyst Seth Goldstein in a note. "The slight decline highlights that the current vehicle lineup is nearing market saturation."
Focus Shifts to Self-Driving Taxi Business
As demand for EVs slows, Musk has pivoted his focus on building a self-driving taxi business, which is expected to boost Tesla’s value. He also backed President-elect Donald Trump with millions of dollars in campaign donations, and analysts expect easier regulations from the new administration to help Tesla in the long run. However, with self-driving technology still under development and years away from commercialization, analysts have said Tesla would need to rely on its promised cheaper versions of current cars and the success of the Cybertruck to achieve Musk’s target of 20 to 30% sales growth in 2025.
Cybertruck Struggles
The truck, known for its futuristic design, has been showing signs of weakness in demand. Tesla’s 2024 deliveries totaled 1.79 million, 1.1% lower than the prior year and below estimates of 1.806 million units, according to 19 analysts polled by LSEG. The company’s production volume also declined 7% year-over-year to 459,445 vehicles in the December quarter.
BYD’s Success
BYD, China’s largest EV maker, reported a 12.1% rise in sales of battery-electric vehicles to 1.76 million in 2024, thanks to competitive prices and a stronger push into Asian and European markets.
Conclusion
Tesla’s decline in deliveries is a sign of the challenges the company faces in the competitive EV market. Despite its efforts to promote its products, including the Cybertruck, the company is struggling to attract customers. The shift in focus to self-driving technology is a strategic move, but it remains to be seen whether it will bear fruit. For now, investors are left to wonder whether Tesla’s growth story is coming to an end.
Frequently Asked Questions
Q: What was the reason for Tesla’s decline in deliveries?
A: The company’s decline in deliveries was attributed to reduced European subsidies, a shift in the United States toward lower-priced hybrid vehicles, and tougher competition from China’s BYD.
Q: What is Tesla’s plan to boost its sales?
A: The company is focusing on its self-driving taxi business and has promised cheaper versions of its current cars. It is also relying on the success of the Cybertruck to achieve its target of 20 to 30% sales growth in 2025.
Q: What is the current state of the electric vehicle market?
A: The electric vehicle market is growing, but at a slower pace than expected. The shift in consumer preferences toward lower-priced hybrid vehicles and the rise of competition from China are affecting Tesla’s sales.
Q: What is the future of Tesla’s Autopilot and Full Self-Driving technologies?
A: Tesla’s Autopilot and Full Self-Driving technologies are still under development and are not yet fully autonomous. The company is facing scrutiny over their safety and effectiveness, and there are ongoing lawsuits and investigations.
