Tesla’s sales fell 1.1% in 2024, the first annual decline in a dozen years

DETROIT (AP) – Tesla posted its first annual sales decline in more than a dozen years Thursday, sinking a stock that has soared since Donald Trump’s victory on optimism Elon Musk’s close relationship to the president-elect will help the company.

Tesla’s global car sales rose 2.3% last quarter thanks to 0% financing, free charging and low-cost leasing. But that wasn’t enough for billionaire Musk’s most prized possession to overcome a sluggish start to 2024.

The Austin, Texas, company sold 495,570 vehicles from October to December, boosting deliveries to 1.79 million for the full year. That was 1.1% below 2023 sales of 1.81 million as overall demand for electric vehicles in the U.S. and elsewhere slowed.

The year-over-year global sales decline is Tesla’s first since 2011, according to figures from research firm Global Data. The company sold 1,306 vehicles in 2010, but that fell slightly to 1,129 the following year.

The boost in the fourth quarter came with a cost. Analysts polled by FactSet expected Tesla’s average selling price to fall to just over $41,000 in the quarter, the lowest in at least four years.

That doesn’t bode well for Tesla’s fourth-quarter earnings on Jan. 29, and Tesla’s stock fell more than 7% on Thursday.

Musk donated more than $250 million to Trump’s campaign and is a regular guest at Trump’s Mar-a-Lago resort in Florida. Tesla investors have pushed the stock up more than 50% since the election on hope the new administration will streamline regulations for electric cars and address other Musk policy priorities.

By 2022, Tesla predicted that its sales would grow by 50% in most years, but the prediction ran into an aging model range and increased competition in China, Europe and the US. In the United States, analysts say most early adopters of the technology already own electric vehicles, and more mainstream buyers have concerns about range, cost and the ability to find charging stations on long trips.

Fourth-quarter deliveries fell thousands short of Wall Street expectations. Analysts polled by data provider FactSet expected sales of 498,000 vehicles.

Falling sales early in the year led to once-unheard-of discounts for the automaker, cutting into its industry-leading margins.

Competition from legacy automakers and start-ups is also growing as they try to chip away at the company’s market share.

Daniel Ives, financial analyst at Wedbush, said he thinks the stock should be valued more at its promise to create fully self-driving, autonomous vehicles and its AI technology and is still worth buying despite the sales decline.

“We have never seen Tesla simply as a car company…instead, we have always viewed Musk and Tesla as a leading global player with disruptive technology,” Ives wrote. “And the first part of this grand strategic vision has taken shape.”

Fourth-quarter sales, while a record for Tesla, show the company’s aging model lineup is reaching saturation in the entry-level luxury car market, Morningstar analyst Seth Goldstein said.

Aside from the Cybertruck, which has had limited appeal, Tesla’s latest consumer model is the Y small SUV, which didn’t go on sale until 2020.

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 cars, Goldstein said.

Tesla has floated the possibility of a new version of the Model Y that would cost in the mid-$30,000s, which could 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 and into the more affordable car market.”

Jeff Schuster, vice president of automotive research Global Data, said Tesla faces intense competition worldwide from electric car makers in China, the United States and elsewhere, many of which sell electric cars to more mainstream buyers. “If they want to continue to see the growth they had, they need to expand to other sizes and price points,” he said.

Musk’s endorsement of Trump for the U.S. president could also turn off some buyers who may be more environmentally conscious and lean Democratic, Schuster said. A broader, less expensive lineup would appeal to a larger group of buyers, he said. “I suspect the choices he’s made on the political front don’t align with a good portion of his buyer profile,” Schuster said.

Industry experts say Tesla used to be the only automaker with credible electric vehicles, but now others such as China’s BYD now have more to offer.

Currently, automakers have 75 electric car models for sale in the U.S. Through the first nine months of last year, sales of electric cars in the U.S. were down, but they are still growing.

For September, sales of new electric vehicles rose 7.2% to about 936,000 in the U.S., according to Motorintelligence.com. That’s slower growth than the 47% increase in 2023. But EV sales this year will likely still surpass last year’s record of 1.19 million. Most other automakers will report full-year sales on Friday.

Almost all of Tesla’s sales last quarter came from the smaller and cheaper Models 3 and Y, with the company selling just 23,640 of its more expensive models, which include the X and S, as well as the new Cybertruck.

Tesla’s global electric car sales beat out Chinese rival BYD, which announced Thursday that totals rose 41% last year, including 1.77 million electric vehicles. The company competes with Tesla for the world’s best-selling electric car manufacturer.

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 year-over-year sales.

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AP reporter Bernard Condon reported from New York City.