Tesla’s annual deliveries fall for the first time as competition hurts demand

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(Reuters) – Tesla reported its first drop in annual deliveries on Thursday as the automaker delivered fewer-than-expected electric vehicles in the fourth quarter and incentives failed to boost demand for its aging lineup of models.

Shares in the company fell 3.5% before the bell, in a sign of investor concerns over the challenges facing CEO Elon Musk, who expected campaigns, including zero-interest financing, to drive “small growth” in shipments by 2024.

Reduced European subsidies, a shift in the US towards cheaper hybrid cars and tougher competition from China’s BYD have pressured Tesla.

In response, Musk pivoted Tesla to self-driving taxis and backed President-elect Donald Trump with millions of dollars in campaign donations, hoping it could bring regulatory relief to the company.

Tesla delivered 495,570 vehicles in the three months to Dec. 31, missing estimates of 503,269 units, according to 15 analysts polled by LSEG.

It delivered 471,930 Model 3 and Model Y vehicles and 23,640 units of other models, including the Model S sedan, Cybertruck and Model X premium SUV. It produced 459,445 vehicles in the October-December period.

Deliveries for 2024 were 1.79 million, down 1.1% from a year ago, below estimates of 1.806 million units, according to 19 analysts polled by LSEG.

With self-driving technology still years away, analysts have said Tesla will rely on cheaper versions of current cars and the Cybertruck to drive near-term sales growth.

The truck, known for its trapezoidal stainless steel exterior, has shown signs of weak demand, analysts have said.

Meanwhile, October registrations of Tesla vehicles in Europe fell 24% due to a tight race from Volkswagen Group, whose Skoda Enyaq SUV dethroned the Model Y as the best-selling EV in the region, according to data analytics firm JATO Dynamics.

Lower prices and incentives squeezed Tesla’s profit margins on car sales last year. However, Wall Street expects demand to pick up in 2025 as the US Federal Reserve cuts interest rates.

Tesla shares rose more than 60% last year.

(Reporting by Akash Sriram in Bengaluru; Editing by Arun Koyyur)