Tesla's Sales, Stock Drop But the Rest of the EV Industry Is Growing

Tesla's sales and share price have dropped as its aging model lineup, notorious maintenance and recall problems (six recalls this year for the Cybertruck even before the explosion in Las Vegas) as CEO Musk's blatant right wing posturing has alienated core customer segments. This has happened as the automotive competitors are releasing more new EVs and global sales are growing. 

There are concerns that he is not focusing adequate time on the company's issues as his attention has turned to conservative causes and that Tesla is headed for another rough year, operationally and financially. JL

Becky Peterson reports in the Wall Street Journal:

Tesla's annual vehicle deliveries fell in 2024 for the first time in more than a decade, after a surge of promotional deals in the fourth quarter failed to stimulate sales. Tesla’s stock closed down 6% Thursday, following the release of its latest delivery figures. Consumers have cooled on the electric-car pioneer’s aging vehicle lineup, which includes models that haven’t been fully redesigned in years, and some have been turned off by Musk’s rightward shift politically and support of Trump. Rival automakers have also flooded the market with competing electric vehicles. Its market share has slipped in recent years. "2025 will be another tough year for Tesla”

Tesla’s TSLA 8.22%increase; green up pointing triangle annual vehicle deliveries fell in 2024 for the first time in more than a decade, after a surge of promotional deals in the fourth quarter failed to stimulate sales enough to top the prior-year results.

The world’s most valuable automaker posted a slight 2% increase in deliveries for the fourth quarter, leaning heavily on promotions, such as interest-free financing deals and free Supercharging, to entice buyers.

While it sold a record number of cars during the three-month period, the final quarterly tally still missed analysts’ expectations and fell short of the roughly 515,000 vehicles it needed to sell in the fourth quarter for Tesla to top its 2023 performance on a full-year basis.

For all of 2024, Tesla delivered 1.79 million vehicles worldwide, down about 1% from a year earlier.

Tesla’s stock closed down 6% Thursday, following the release of its latest delivery figures. The company’s shares have rallied in the weeks after the U.S. election, ending 2024 up more than 61%.

Chinese rival BYD has been gaining on Tesla in recent years and continued to close the gap in 2024, reporting this week that its electric-car sales grew 12% last year to about 1.76 million globally. 

 

Wall Street has largely looked past Tesla’s sales turbulence and focused on Chief Executive Elon Musk’s long-term strategy to shift the company toward robotics and artificial intelligence. Tesla’s share price has nearly doubled in the weeks since the election, sending Tesla’s value to a high of $1.5 trillion in mid-December.

On New Year’s Day, Tesla was thrust into the spotlight when a rented Cybertruck pickup loaded with canisters of gas and firework mortars exploded in front of Trump International Hotel in Las Vegas, killing one person and injuring seven others.

The Tesla CEO wrote on X, the social-media platform he owns, that his team investigated the incident and that the explosion was “unrelated to the vehicle itself.”

In recent weeks, Musk’s attention has drifted away from his companies and into the political arena. He has spent his time sitting side-by-side with President-elect Donald Trump at his Mar-a-Lago resort, suggesting cuts to government spending through the Department of Government Efficiency and successfully lobbying Congress to kill a government spending bill.

Investors are hopeful that Musk’s proximity to Trump will aid his businesses, including through federal regulations that simplify Tesla’s path to deploying autonomous vehicles nationwide.

In October, Musk unveiled the prototype for a two-seater, fully autonomous robotaxi called the Cybercab, which he said could be priced under $30,000 and would be available for individual customers to buy. He said that Tesla planned to produce the Cybercab by 2027. He also revealed a larger vehicle for transporting up to 20 people or cargo, which it dubbed the Robovan.

Despite these longer-range bets, Tesla’s most pressing challenges are in its core auto business, which has lost momentum after years of the company posting double-digit sales growth. 

Tesla had steadily posted year-over-year increases in its global vehicle deliveries since 2012, when it released the Model S, a luxury sedan and its second model after the Roadster sports car. 

Tesla has benefited in the U.S. from a $7,500 federal EV credit, which has lowered the total cost of its vehicles for many customers but is expected to be removed. PHOTO: JUSTIN SULLIVAN/GETTY IMAGES

More recently, consumers have cooled on the electric-car pioneer’s aging vehicle lineup, which includes models that haven’t been fully redesigned in years, and some have been turned off by Musk’s rightward shift politically and support of Trump. 

Rival automakers have also flooded the market with competing electric vehicles, many of which are already selling with steep discounts as unsold inventory has stacked up. Tesla started delivering its newest model, the Cybertruck, in late 2023. The lowest-price version of the Cybertruck now starts at $79,990.

Tesla is expected to release a new, lower-cost car in the first half of 2025, though it is unclear whether it is a new model or an update to an existing car in its lineup.

Tesla’s 2024 got off to a difficult start. In the first quarter, it posted its first year-over-year decline in global deliveries since 2020. Its performance continued to slide in the second quarter with the automaker reporting a 6.5% decline in global deliveries for the first half of 2024.

Despite those headwinds, the company has benefited in the U.S. from the $7,500 federal EV credit, which has lowered the total cost of its vehicles for many customers. Tesla’s sales picked up in the latter part of the year with deliveries totaling 495,570 vehicles in the fourth quarter.

 

Trump is expected to get rid of those federal subsidies, a move that Musk himself has supported, while acknowledging that it would likely hurt Tesla’s car business.

Musk has sought to refocus investor attention away from car sales and onto its driver-assistance software, which it calls Full Self-Driving (Supervised), and its Optimus humanoid robot—technologies he has claimed could one day boost the automaker’s market value to as high as $30 trillion.

 

The company has said that it plans to spend $10 billion on artificial-intelligence research this year across projects that include its Dojo supercomputer and development of Optimus.

Such investments are largely funded by Tesla’s car business, which in recent quarters has faced several challenges. More broadly, demand for electric vehicles has slumped in the U.S., after a sharp uptick in sales during the pandemic. Tesla is also facing tougher competition in China, where homegrown rivals, such as BYD, have tightened their grip on the country’s electric-vehicle market.  

While Tesla is still the top EV seller in the U.S., its market share has slipped in recent years.

The company accounted for 43% of all electric vehicles sold in the U.S. in November, compared with 51% of sales a year earlier, according to data from research firm Motor Intelligence.

To win customers over, Tesla has leaned into frequent price cuts and offered aggressive promotions, deals that have cut into the company’s operating margins and affected revenue.

The electric-car maker plans to report earnings in late January. 

Bernstein analysts described Tesla’s stock as in “overdrive” and said they struggled to understand why the company has focused on building a dedicated Cybercab, over a vehicle that has some self-driving capabilities but broader appeal. 

“The upshot is we believe 2025 will be another tough year for Tesla,” the analysts wrote in a note published Thursday.