Tesla stock plummets as EV giant reports decline in annual deliveries for the first time

Tesla faced a rare stumble as it reported a drop in annual vehicle deliveries for the first time. The electric vehicle (EV) giant announced on Thursday that it delivered 1.79 million vehicles in 2024, marking a slight 1.1 per cent decrease compared to the previous year.  

Despite promotions like zero-interest financing, the company fell short of expectations in the fourth quarter, handing over fewer vehicles than forecasted, adding to concerns about weakening demand for its ageing lineup.

Missed targets and delivery challenges

Tesla delivered 495,570 vehicles in the final quarter of 2024, missing the projected 503,269 units. The bulk of these were Model 3 and Model Y vehicles, with 471,930 units delivered, while 23,640 units comprised other models, including the Model S, Model X, and Cybertruck. Production figures also lagged slightly, with 459,445 vehicles rolled out during the quarter. Analysts had anticipated stronger numbers, but Tesla struggled to maintain its delivery momentum, missing quarterly targets multiple times throughout the year.

The dip in deliveries comes at a time when competition in the EV market is heating up. Reduced subsidies in Europe, a growing preference for hybrid vehicles in the US, and increasing pressure from Chinese EV leader BYD have created a challenging environment for Tesla. Compounding the issue, Tesla’s efforts to boost demand through price cuts and the introduction of the Cybertruck have yet to yield significant results.

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Investor worries and stock reaction

Tesla’s stock tumbled 3.5 per cent in pre-market trading on the news of the missed targets, reflecting investor concerns over the company’s future trajectory. While the stock has soared over 60 per cent this year, bolstered by Musk’s ties to President-elect Donald Trump, the latest figures have tempered enthusiasm. Musk’s personal fortune has continued to climb, surpassing $400 billion, but legal battles over his $56 billion pay package and his divisive political affiliations have created additional turbulence.

Musk’s pivot toward self-driving taxis and substantial campaign donations to Trump have also raised eyebrows. While this strategy aims to secure regulatory relief for Tesla, the reality of fully autonomous vehicles remains years away, leaving the company reliant on existing models to drive growth in the short term.

Competitive pressures and the road ahead

Tesla’s dominance is being challenged in key markets. European registrations for Tesla vehicles dropped 24 per cent in October, as Volkswagen’s Skoda Enyaq SUV dethroned the Model Y as the region’s top-selling EV. Meanwhile, demand for the Cybertruck, despite its futuristic stainless-steel design, has shown signs of waning.

The company’s decision to slash prices on several models to compete with rivals like BYD has squeezed profit margins, adding to financial strain. However, analysts remain optimistic that demand could rebound in 2025 if the US Federal Reserve lowers interest rates, potentially making EV purchases more attractive.

As Tesla navigates these challenges, it faces the dual task of addressing immediate delivery concerns while planning for a future shaped by self-driving technology and intensifying competition. For now, the company’s ability to adapt will be critical in determining whether it can maintain its position at the forefront of the EV revolution.

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