Tesla has experienced a downturn in its annual sales for 2024, marking the first decline in nine years.
Despite a global sales increase of 2.3% in the fourth quarter, Tesla’s overall performance in 2024 saw a 1.1% drop in annual sales compared to the previous year. This decline, recorded in their Austin, Texas base, was unexpected despite promotional strategies such as 0% financing, free charging, and offering low-priced leases. These efforts were insufficient to counterbalance decreased demand for electric vehicles, especially in the U.S., where Tesla’s sales fell.
During the fourth quarter, Tesla delivered 495,570 vehicles, contributing to a yearly total of 1.79 million vehicles. While this is impressive, it falls short of the 1.81 million vehicles sold in 2023. Analysts from FactSet had predicted higher sales figures, and the inability to meet these expectations posed challenges for Tesla. Furthermore, the average sales price per vehicle dropped to just over $41,000, the lowest in four years, potentially impacting the company’s earnings when they announce them on January 29, 2025.
Tesla’s forecasts from 2022 anticipated a 50% growth in sales annually, but this prediction was hindered by an aging model lineup and increasing competition from both legacy and startup automakers in key markets like China, Europe, and the U.S. In the United States, while early technology adopters have largely purchased electric vehicles, mainstream customers have concerns about range, price, and charging station availability. These factors have resulted in Tesla’s deliveries falling short of Wall Street estimates, with FactSet analysts forecasting 498,000 vehicle sales for the fourth quarter.
The stock market reflected these developments, with Tesla shares dropping 5.2% in early Thursday trading. Despite this, shares have appreciated more than 50% over the past 12 months, significantly influenced by political changes in the U.S. Under pressure from declining sales, Tesla introduced rare discounts, affecting its traditionally high profit margins.
Notably, the majority of Tesla’s sales consisted of its lower-cost Models 3 and Y, yet the company only sold 23,640 of its premium models, including the X, S, and the newly introduced Cybertruck. This places Tesla in a competitive position against BYD, a Chinese rival that reported a robust 41% increase in sales last year, with 1.77 million electric vehicles sold.
Production metrics also raised concerns as Tesla’s fourth-quarter production stood at 459,445 vehicles, a figure less than total deliveries, indicating constraints or inefficiencies in their production processes.
Tesla’s reported sales decline for 2024 presents significant challenges, emphasizing the need for strategic adjustments in response to heightened competition and market dynamics.
Source: News4jax
