Tesla Reports First-Ever Annual Delivery Decline Amid Intensified Competition

Tesla has reported its first annual decline in vehicle deliveries, citing reduced demand and rising competition in key markets. The company delivered 1.79 million vehicles in 2024, a 1.1% drop from the previous year, falling short of analysts’ estimates of 1.806 million.

Fourth Quarter Performance Misses Expectations

In the last quarter of 2024, Tesla delivered 495,570 vehicles, missing market expectations of 503,269. Production also dipped, with 459,445 units produced—a 7% decrease compared to the same period in 2023.

Competitive Pressures and Global Challenges

Tesla faces challenges from:

• BYD’s Expansion: China’s BYD reported a 12.1% increase in battery-electric vehicle sales, totaling 1.76 million units in 2024.
• European Market Dynamics: Tesla’s European registrations fell by 24% in October, with Volkswagen’s Skoda Enyaq SUV overtaking Tesla’s Model Y as the best-selling EV in the region.
• Shift in U.S. Market: Increasing demand for lower-priced hybrid vehicles has added pressure.

Reduced subsidies for EVs in Europe and economic competition from other automakers have also contributed to Tesla’s struggles.

Strategic Shifts

Elon Musk is focusing on future product launches, including a lower-cost model and ramping up Cybertruck production. However, demand for the Cybertruck, despite its futuristic design, has shown signs of weakness.

Analysts predict Tesla will rely heavily on these launches to meet Musk’s ambitious goal of 20%-30% sales growth in 2025.

“Tesla will continue to lean on the planned launch of a new low-cost model in 1H25 to stoke confidence on the opportunity for 2025 deliveries to grow year-over-year,” said David Wagner, portfolio manager at Aptus Capital Advisors.

Tesla’s “Trump Bet”

Tesla shares surged over 60% in 2024, partly attributed to Elon Musk’s support for President-elect Donald Trump, including significant campaign contributions.

Musk plans to leverage his role as a government-efficiency czar to push for federal autonomous vehicle regulations, aiming to simplify the fragmented state-by-state approval process.

Autonomous Driving Under Scrutiny

Tesla’s Autopilot and “Full Self-Driving” technologies remain under regulatory investigation and legal scrutiny, with concerns over whether Tesla overstated the vehicles’ autonomous capabilities.

Outlook for 2025

Tesla’s prospects could improve with anticipated interest rate cuts by the U.S. Federal Reserve, which may boost consumer spending on EVs. However, analysts emphasize the importance of new models and strategic adjustments to regain momentum in the competitive EV market.