Tesla, one of the leading electric vehicle (EV) manufacturers, experienced a decline in annual sales for the first time since 2015. According to Reuters, Tesla delivered approximately 1.79 million vehicles in 2024, a 1.1% decrease compared to 2023. This decline was driven by several factors, including reduced demand and increased competition in the EV market.
Key Challenges Faced by Tesla:
- Reduced Demand:
Tesla struggled to boost demand for its older models, despite incentives such as interest-free financing. CEO Elon Musk had predicted that these measures would lead to “slight growth” in deliveries, but the results fell short of expectations. - Intense Competition:
Tesla faced pressure from competitors, particularly in European and American markets. In Europe, for example, Volkswagen’s Skoda Enyaq surpassed Tesla’s Model Y to become the best-selling electric vehicle in the region. Additionally, competition from Chinese companies like BYD, which offers competitively priced EVs, intensified. - Reduced Government Support:
The decline in European government subsidies for electric vehicles negatively impacted Tesla’s sales, alongside a shift towards more affordable hybrid vehicles in the United States. - Declining Profit Margins:
Price cuts and incentives reduced Tesla’s profit margins from vehicle sales over the past year.
Performance in Q4 2024:
Tesla delivered 495,570 vehicles in the fourth quarter of 2024, falling short of analysts’ expectations of 503,269 units. These deliveries included 471,930 units of Model 3 and Model Y, and 23,640 units of other models such as the S, X, and Cybertruck.
Future Outlook:
Despite the challenges Tesla faced in 2024, Wall Street anticipates a rebound in electric vehicle demand in 2025, especially with expectations of the Federal Reserve cutting interest rates, which could stimulate consumer spending.
Tesla’s Future Strategy:
In response to these challenges, Elon Musk has directed Tesla towards developing self-driving taxis. Additionally, he has supported U.S. President-elect Donald Trump with millions of dollars in campaign donations, hoping to ease regulatory pressures on the company.