Tesla, the electric vehicle behemoth, has reported a 1.1% drop in sales in 2024, marking its first annual decline in over a decade. Despite a 2.3% rise in global vehicle sales in the final quarter, the company could not overcome a sluggish start to the year. The Austin, Texas-based company sold 495,570 vehicles from October through December, pushing the total deliveries to 1.79 million for the full year. However, this figure fell short of the 2023 sales of 1.81 million, indicating a slowdown in the overall demand for electric vehicles in the U.S. and other markets.
This year-over-year global sales drop is Tesla’s first since 2011, according to figures from analytics firm Global Data. The company sold 1,306 vehicles in 2010, which dropped slightly to 1,129 the following year. The fourth-quarter boost came at a cost. Analysts polled by FactSet expected Tesla’s average sales price to fall to just over $41,000 in the quarter, the lowest in at least four years. This drop in average sales price does not bode well for Tesla’s fourth-quarter earnings, which are due on Jan. 29. Consequently, Tesla’s stock fell more than 7% on Thursday.
The Impact of the Sales Drop and Market Response
Tesla’s CEO, Elon Musk, who donated more than $250 million to Trump’s campaign and is a regular guest at Trump’s Mar-a-Lago resort in Florida, has seen investors push the stock up more than 50% since the election. This surge in stock price is based on hopes that the new administration will streamline electric vehicle regulations and address other Musk policy priorities.
However, Tesla’s prediction in 2022 that its sales would grow 50% most years ran into obstacles such as an aging model lineup and increased competition in China, Europe, and the U.S. Analysts suggest that most early adopters of technology already own electric vehicles, and more mainstream buyers have concerns about range, price, and the ability to find charging stations on longer trips.
To meet Tesla management’s guidance of 20% to 30% annual sales growth this year, the company will need to come out with a vehicle priced in the mid $30,000s to appeal to more mainstream buyers who might be considering gas, electric, or hybrid vehicles, Goldstein said. Tesla has floated the possibility of a new version of the Model Y that would cost in the mid $30,000s that may be smaller inside than the current Y with fewer features, Goldstein said. “At that point you’re comparable to some Hondas and Fords and GMs,” Goldstein said. “It takes you out of the luxury market to the more affordable vehicle market.”
Despite the sales dip, analysts maintain a rosy outlook for the company in 2025. The company’s global electric vehicle sales edged out Chinese rival BYD, which announced Thursday that total soared 41% last year including 1.77 million EVs. The company is vying with Tesla for the world’s top selling EV maker. Fourth quarter production of 459,445 vehicles was below total deliveries for the quarter, and full year production of 1.77 million was less than the year’s sales.