Tesla on Thursday reported its first drop in annual deliveries, as the automaker delivered fewer electric vehicles than expected in the fourth quarter and incentives failed to boost demand for its aging model lineup.
The company’s shares fell 3.5% before the bell, in a sign of investor concern about the challenges facing CEO Elon Musk, who hoped promotions, including interest-free financing, would boost a “slight growth” in deliveries in 2024.
Reducing European subsidies, a shift in the United States toward lower-priced hybrid vehicles and tougher competition from China’s top electric vehicle maker, BYD, have put pressure on Tesla.
In response, Musk pivoted Tesla toward self-driving taxis and backed President-elect Donald Trump with millions of dollars in campaign donations in hopes he could provide regulatory relief to the company.
Tesla delivered 495,570 vehicles in the three months to December 31, missing estimates of 503,269 units, according to 15 analysts surveyed by LSEG.
It delivered 471,930 Model 3 and Model Y vehicles and 23,640 units of other models, including the Model S sedan, Cybertruck and the Model X premium SUV. It produced 459,445 vehicles during the October-December period.
Deliveries for 2024 were 1.79 million, down 1.1% from a year ago, below estimates of 1.806 million units, according to 19 analysts surveyed by LSEG.
With self-driving technology still years away, analysts have said Tesla will have to rely on cheaper versions of current cars and the Cybertruck to drive sales growth in the near term.
The truck, known for its trapezoidal stainless steel exterior, has been showing signs of weakness in demand, analysts said.
Meanwhile, Tesla vehicle registrations in Europe in October fell 24%, due to a close race by the Volkswagen Group, whose Skoda Enyaq SUV dethroned the Model Y as the best-selling electric vehicle in the region, according to research firm Jato Dynamics data.
Lower prices and incentives limited Tesla’s profit margin on vehicle sales last year. Wall Street, however, expects demand to rebound in 2025 as the US Federal Reserve cuts interest rates.
Tesla shares had risen more than 60% last year.