Tesla Shares Slide After First Annual Drop in Deliveries

Tesla Shares Slide After First Annual Drop in Deliveries | Mr. Business Magazine

Tesla shares its fourth-quarter and annual vehicle production and delivery figures for 2024, revealing a significant development: the company experienced its first annual decline in deliveries. This marks a shift in Tesla’s trajectory as it faces increasing competition and operational challenges.

Decline in Deliveries and Production Numbers

In the fourth quarter of 2024, Tesla delivered 495,570 vehicles and produced 459,445 vehicles. For the full year, Tesla’s total deliveries stood at 1,789,226, while total production reached 1,773,443. These figures represent a drop from the 1.81 million deliveries recorded in 2023.

The company’s shares fell by as much as 7% on Thursday, reflecting investor disappointment. Analysts had projected deliveries of approximately 504,770 for the quarter, including 474,000 Model 3 and Model Y vehicles, but Tesla fell short of these expectations.

Also read: Tesla cybertruck explosion: Why Elon Musk thinks attacker ‘picked wrong vehicle’

Stock Performance and Challenges

Tesla shares had experienced a substantial rally in the latter half of 2024, ending the year up 63%. This marked a dramatic recovery from a challenging first quarter when the stock plummeted 29%, the company’s worst performance since 2022. Despite price cuts and buyer incentives, Tesla struggled with declining sales earlier in the year.

CEO Elon Musk had predicted higher sales for 2024 compared to 2023 but acknowledged that the growth rate would slow significantly from the 38% achieved in the previous year. The delivery figures confirmed this slower growth trajectory.

Competition and Market Dynamics

Tesla’s dominance in the electric vehicle market is being challenged by competitors, including domestic automakers like General Motors, Ford, and Rivian, as well as international players such as BYD in China, Hyundai in Korea, and European giants like BMW and Volkswagen.

While Tesla has maintained its edge in certain areas, such as its robust charging network, its operational challenges have come to the forefront. The fourth quarter highlighted the complexity of scaling production and maintaining sales momentum in a competitive market.

Cybertruck and Affordability Issues

The launch of the Cybertruck has been another area of concern. Priced at approximately $80,000, the angular steel vehicle has not resonated strongly with consumers, leading to reports of unsold inventory piling up on used car lots. Industry experts believe Tesla missed an opportunity by not introducing more affordable electric vehicles in 2024.

Tesla has also faced declining sales in Europe. Between January and November, the company sold 283,000 vehicles in the region, a 14% drop compared to the same period in 2023. In November alone, registrations fell to 18,786 from 31,810 the previous year.

Pressures in China and North America

In China, Tesla’s Model Y remained a popular choice, ranking as the second-best-selling model in the country. However, its growth has not kept pace with the overall market, which saw an 8% increase in EV sales through November, compared to Tesla’s 5% growth for the Model Y. Competitors like BYD and other Chinese brands have outpaced Tesla, both domestically and in export markets.

In North America, Tesla offered various price cuts and incentives on models such as the Model Y SUV during the fourth quarter to boost sales. Despite these efforts, the company saw an accumulation of inventory, highlighting potential challenges in demand.

Future Outlook

Looking ahead to 2025, Tesla shares has expressed optimism about offering lower-cost and autonomous vehicles, projecting growth of 20% to 30% over 2024. However, the company must navigate intensifying competition and operational hurdles to achieve these targets.

Tesla’s annual delivery decline and the challenges it faced in 2024 underscore the evolving dynamics of the electric vehicle market. As competitors gain ground and consumer preferences shift, Tesla will need to adapt to maintain its position as a leader in the industry.

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