Tesla, the leading electric vehicle (EV) maker, reported its first fall in yearly deliveries on Thursday. This news came as a surprise to many, as the company had been experiencing a steady growth in sales over the past few years. However, despite the setback, Tesla remains optimistic about its future prospects.
The decline in deliveries can be attributed to a combination of factors. One of the main reasons is the aging line up of Tesla’s models, which have been on the market for a few years now. This, coupled with reduced European subsidies and a shift in the United States towards lower-priced hybrid vehicles, has made it challenging for Tesla to attract customers. Additionally, the company faced tough competition from Chinese EV maker BYD, which offered competitive prices and a stronger push into the Asian and European markets.
In an effort to boost sales, Tesla CEO Elon Musk had predicted “slight growth” in 2024 deliveries and offered a range of promotions, including interest-free financing and free fast-charging. However, these efforts were not enough to offset the impact of the aforementioned factors.
Despite the decline in deliveries, Tesla’s shares fell by only 6%, which is a testament to the company’s strong brand and loyal customer base. However, analysts at Morgan Stanley believe that Tesla’s aging models and the availability of cheaper alternatives have overshadowed the company’s promotional activities.
In the face of the slowdown in demand for EVs, Musk has shifted his focus to building a self-driving taxi business, which is expected to boost Tesla’s value. He has also shown support for President-elect Donald Trump, with millions of dollars in campaign donations. Analysts believe that the new administration’s policies, which are expected to be more lenient towards the EV industry, will benefit Tesla in the long run.
Musk’s ambitious target of achieving 20% to 30% sales growth in 2025 will heavily rely on the success of Tesla’s promised cheaper versions of current cars and the highly anticipated Cybertruck. However, the futuristic truck has been showing signs of weakness in demand, which could pose a challenge for Tesla in achieving its target.
Despite the decline in deliveries, Tesla still managed to outperform its rival BYD, which reported a 12.1% rise in sales of battery-electric vehicles in 2023. This can be attributed to Tesla’s strong brand and loyal customer base, as well as its competitive prices and strong presence in the Asian and European markets.
Tesla’s shares had a strong performance in 2024, rising more than 60% after the election of Trump, who has shown strong support for the company. Musk has also expressed his plans to leverage his role as a government-efficiency czar under the Trump administration to advocate for a federal approval process for autonomous vehicles. This would replace the current state-specific laws, which Musk described as “incredibly painful” to navigate.
However, Tesla’s Autopilot and “Full Self-Driving” technologies, which are not yet fully autonomous, have been under scrutiny due to lawsuits, a U.S. traffic safety regulator probe, and a Department of Justice criminal investigation. The key concern is whether Tesla may have overstated the self-driving abilities of its vehicles. Despite these challenges, Tesla remains committed to developing and improving its self-driving technology.
In addition to facing challenges from competitors and regulatory scrutiny, Tesla is also under pressure from legacy automakers. In October, the company’s registrations in Europe fell by 24%, as it faced tough competition from Volkswagen Group. The Skoda Enyaq SUV, which is a direct competitor to Tesla’s Model Y, dethroned it as the best-selling EV in the region, according to data research firm JATO Dynamics.
Furthermore, there are reports that Trump’s team is considering ending the $7,500 tax credit for consumer EV purchases. This move could worsen the already slowing shift to EVs in the U.S. However, Tesla remains optimistic and is determined to continue leading the way in the EV industry.
In conclusion, while Tesla’s first fall in yearly deliveries may have come as a disappointment, the company remains confident in its future prospects. With its strong brand, loyal customer base, and innovative technology, Tesla is well-positioned to overcome the challenges it currently faces and continue its growth in the EV market.
