Tesla Reports First Annual Sales Drop
Tesla has posted its first-ever drop in annual sales since becoming a public company. The decrease was driven by rising competition and a slowdown in demand for electric vehicles (EVs).
Q4 Sales Performance
In the fourth quarter, Tesla sold 495,570 vehicles, marking a 2% increase compared to the same period last year. However, it was still behind Chinese rival BYD, which sold 595,413 EVs in the same quarter. Despite this, Tesla’s total sales for the year reached 1.8 million vehicles, surpassing BYD by 24,000 units, and retaining the title of the world’s largest EV maker.
Annual Sales Decline
Tesla’s overall sales for 2024 declined by 1% compared to 2023. This is the first time in the company’s history that it has reported a year-on-year sales drop. Tesla had previously enjoyed annual sales growth of nearly 50%, and in 2023, it reported a 37% increase from 2022. Therefore, even a small decline this year represents a major slowdown.
Increased Competition
Tesla faces growing competition not only from Chinese automakers like BYD but also from established global brands such as General Motors, Ford, Volkswagen, and South Korea’s Hyundai and Kia. While these legacy automakers still mostly produce gasoline-powered cars, their entry into the EV market is posing a challenge to Tesla.
Tesla’s Response to Slowing Demand
In response to declining demand, Tesla has reduced vehicle prices in both China and the United States. Tesla remains more profitable than its traditional rivals, who are still losing money on their EV sales as they work to expand their sales and reduce production costs.
EV Market Growth
Despite the slowdown in Tesla’s sales, electric vehicle sales are still growing both in the U.S. and globally, though at a slower rate than before.
Stock Market Reaction
Tesla’s shares fell more than 4% in early trading following the weak sales report. However, the company’s stock finished the year up by 68%. Most of the gain occurred after Election Day, as investors anticipated that Tesla would benefit from policies under the incoming Trump administration, particularly due to CEO Elon Musk’s strong support for the president-elect.