Tesla Annual Deliveries Dip Amidst Slowing Demand for Electric Cars
EV manufacturer Tesla has reported a drop in its annual deliveries for the first time in over a decade. Yahoo Finance reported that Tesla’s annual deliveries for 2024 stood at 1.79 million units, about 1% less than its 2023 deliveries.
Tesla also produced fewer cars in 2024 compared to 2023. 2024’s production was less than 1.8 million units, which is a 4% drop from 2023’s production.
Big Impact
The results from the Elon Musk-led company serve as a reminder of the challenges that EV manufacturers continue to face. Analysts suggest that the fall in Tesla deliveries could have a long-term impact on the company’s growth.
“Lower deliveries reduces Tesla’s growth and lowers the total addressable market for the company’s ancillary services, including autonomous driving software, charging, and insurance. The slight decline highlights that the current vehicle lineup is nearing market saturation,” Seth Goldstein of Morningstar said.
Tesla sales declined after its Cybertruck launch and year-end incentives on the company’s aging vehicles failed to attract customers who had concerns about the high cost of credit. Musk had predicted that Tesla would experience a slight increase in 2024 deliveries. To boost sales, the company launched multiple promotions that included free fast charging and interest-free financing.
However, reduced subsidies in the European market, tough competition particularly from BYD, and the shift in US policy in favor of lower-priced hybrid cars had an impact on Tesla’s business model.
Outperforming BYD
Despite the 1% dip, Tesla’s EV deliveries for 2024 were still higher compared to BYD sales. The Chinese EV maker reported that it sold 1.76 million units of battery-electric vehicles in 2024. This represents a 12.1% increase from the previous year. BYD sales were largely driven by competitive pricing and its aggressive push in the European and Asian markets.
China is Tesla’s second largest market. In this country, the US EV manufacturer reported sales of over 657,000 vehicles in 2024. This is 8.8% more sales than the previous year. Tesla extended discounts to attract Chinese buyers in this market.
Overall, Tesla shipped 495,570 cars in the October – December quarter against a target of 503,269 units. The company manufactured 459,445 units during this period, which is 7% lower compared to the same period in 2023.
2025 EV Outlook
In the latest earnings call, Musk said the company forecasts a 20% to 30% growth in 2025. This growth will be driven in part by affordable EVs that the company will be unveiling in the first half of the year.
Analysts have expressed doubt about Tesla’s ability to achieve its 2025 sales targets, particularly if the Trump administration reverses the $7,500 EV tax credits on consumer purchases. This shift will slow down the shift to EVs across the US.
“What was interesting is that their sell-through also declined in the year, even though people know that there’s a tax credit elimination coming potentially in 2025. That didn’t seem to accelerate anything, that may be telling,” Globalt Investments Portfolio Manager Thomas Martin said.
Leveraging Self-Driving Technology
Tesla will be depending on Tesla’s self-driving technology to grow sales in 2025. Tesla’s robotaxi business is expected to boost the company’s value in future. Musk plans to leverage his government-efficiency role in the Trump administration to push for an approval process for self-driving vehicles.
But profitability for this venture could take time because self-driving technology is still under development. It will take years to commercialize this technology. Tesla’s Full Self-Driving and Autopilot technologies have previously come under government scrutiny over safety concerns.
Musk also plans to leverage the Cybertruck to achieve its 2025 sales revenue targets. But even the demand for Cybertruck hasn’t been good. Although the truck stands out for its futuristic design, there have been signs of low demand. The company hasn’t released delivery numbers for the Tesla EV Cybertruck yet.
