Tesla’s global annual sales fell for the first time in at least nine years. The 2.3% increase last quarter was insufficient to overcome a sluggish start to 2024, despite offers of 0% financing, free charging and low-cost leasing.
The Austin, Texas, company delivered 495,570 vehicles from October to December, bringing deliveries to 1.79 million for the entire year. In 2023, it was 1.81 million.
The 1.1% drop in sales was driven by slowing overall demand for electric vehicles in the United States and elsewhere.
In 2022, Tesla predicted its sales would increase by 50% in most years, but that prediction was met with an aging model lineup and increased competition in China, Europe and the United States.
The fourth quarter increase had a cost. Analysts polled by FactSet expected Tesla’s average sales price to fall to just over $41,000 during the quarter, the lowest in at least four years.
Market already clogged?
This does not bode well for Tesla’s fourth quarter results, which the company will announce on January 29.
Fourth-quarter deliveries fell short of Wall Street estimates. Analysts polled by data provider FactSet expected sales of 498,000 vehicles.
In the United States, analysts say most early adopters of the technology already own electric vehicles, and mainstream buyers are concerned about range, price and the ability to find charging stations on long journeys.
Tesla shares tumbled nearly 7% on Thursday, but they had risen more than 50% over the past 12 months, surging with Donald Trump’s election victory.
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During the last campaign, Tesla boss Elon Musk supported Donald Trump. (Archive photo)
Photo : Getty Images / AFP / Jim Watson
The fall in sales at the start of the year led the car manufacturer to grant unprecedented discounts, thus reducing its profit margins, the highest in the sector.
Competition from traditional automakers and start-ups is also intensifying as they try to eat into the company’s market share.
A test for investors
The sales decline is a test for investors who have driven up Tesla shares since the U.S. election by betting that President-elect Donald Trump’s administration would ease regulations on electric vehicles and help Tesla launch into the manufacturing of fully autonomous vehicles using artificial intelligence.
Daniel Ives, a financial analyst at Wedbush, thinks the stock is still worth buying despite the decline in sales.
“We have never viewed Tesla simply as an automotive company, instead we have always viewed (Elon) Musk and Tesla as a leading global player in disruptive technologies,” Ives said in a report. And the first part of this great strategic vision has taken shape.
William Stein, an analyst at Truist Securities, believes Tesla will struggle to sell vehicles in the coming months and expects new discounts to be used to boost sales that are weighing on its financial results.
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Tesla is struggling to sell its most luxurious models.
Photo : Associated Press / David Zalubowski
Nearly all of Tesla’s sales came from the smaller, cheaper Model 3 and Model Y, with the company selling just 23,640 of its more expensive models, including the X and S, as well as the new Cybertruck.
Tesla’s global electric vehicle sales have outpaced those of its Chinese rival BYD, which announced Thursday that the total jumped 41% last year, a total that includes 1.77 million electric vehicles.
The company competes with Tesla for the title of maker of the world’s best-selling electric vehicles.
Fourth-quarter production of 459,445 vehicles was lower than total deliveries for the quarter, and full-year production of 1.77 million was lower than sales for the year.
