Why Tesla shares fell to start the new year

On By Littum

The inventory of Tesla (TSLA -7.46%) had a monster run to the end of 2024. However, it starts 2025 on a downward note, and not just because of profit-taking. Tesla released its fourth-quarter and full-year electric vehicle (EV) delivery data, and investors were not impressed.

For the first time ever, the company realized a year-on-year decrease in the amount of electric cars it shipped to customers. Shares fell as much as 7.5% on Thursday morning as a result. From As of 11:15 ET today, the stock was still trading lower by 5.8%. That helped stem the late 2024 rally that led to a return of more than 62% last year.

In addition to Tesla’s electric cars

Management reported 495,570 EV deliveries in the fourth quarter. While that was a quarterly record, it missed expectations by about 505,000 shipments. It also meant Tesla delivered slightly fewer vehicles in 2024 compared to 2023. Full-year deliveries were around 1.79 million compared to 1.81 million the year before.

But investors need to look beyond their EVs to make sense of the stock’s valuation. Tesla’s energy segment is an area to watch. After experiencing 125% growth in energy deployments in 2023, the company’s 31.4 gigawatt-hours (GWh) of energy storage in 2024 represented another 114% year-over-year increase. The demand for energy storage has increased as the production of renewable energy has grown.

But many investors are waiting for the company to roll out a truly autonomous vehicle that doesn’t require human intervention. Elon Musk has touted Tesla’s self-driving technology to enable a fleet of robotic axes that would provide a potentially major new revenue stream for the company. Its robotics division could also be a future revenue contributor.

For now, income and profits come from the sale of electric cars. With a slight decline for the first time year over year, some investors are selling shares today after a big return in 2024. Long-term investors should continue to see how Tesla’s technology continues to develop and decide if that potential is worth holding on the shares.