Wall Street is concerned that Tesla's growth targets for 2025 are hanging by a thread after annual sales declined for the first time in over a decade.
Analysts warn that weak production in the fourth quarter could indicate weak sales in the first quarter of 2025, raising doubts in the market about Tesla's ambitious goal of a 20-30% increase in deliveries for 2025.
The stock tumbled more than 6% on Thursday, as the Q4 deliveries missed expectations and annual deliveries failed to grow year over year.
The data showed that Tesla produced approximately 1.773 million electric vehicles in 2024 and delivered around 1.79 million cars. This is lower than both the 1.8 million cars delivered in 2023 and the widespread analyst expectation of 1.8 million vehicles, marking the first annual sales decline since Tesla's IPO in 2011.
The fourth-quarter data was also less than satisfactory. In the fourth quarter of 2024, Tesla produced approximately 459,000 vehicles, below the analyst expectation of 505,000, and delivered around 496,000 cars, setting a new record for single-quarter deliveries but still falling short of the average analyst expectation of approximately 512,000 vehicles.
The only highlight came from the energy storage business. Tesla installed energy storage products with a capacity of 11 gigawatt-hours in the fourth quarter, a year-over-year increase of 245% and a quarter-over-quarter increase of 60%, surpassing the consensus by 15%.
Regarding the fourth-quarter data, HSBC commented that weak production could indicate weak sales in the first quarter of 2025, which would raise market doubts about Tesla's ambitious goal of a 20-30% increase in deliveries for 2025.
UBS stated that the higher deliveries versus production in the fourth quarter led to a decrease in Tesla's inventory. The company may have slowed production of the Model Y at the Texas Gigafactory, possibly to prepare for a new low-cost model. The production pace of the Cybertruck may also have slowed.
Looking ahead to the January 29th earnings report, HSBC stated that given the weak deliveries and production in the fourth quarter, company earnings are expected to decline quarter-over-quarter (as already hinted at in the third quarter). There is still some room for positive surprises in the release of Full Self-Driving (FSD) and regulatory credits.
HSBC emphasized that investors should focus on Tesla's guidance for 2025—particularly whether Tesla will reaffirm its annual growth target of 20-30% (HSBC's expectations, market consensus, and third-party data providers are all below this figure).
UBS indicated that despite the current market pessimism regarding Tesla's 2025 sales expectations (UBS growth forecast is only 8%), new models could still drive 2025 deliveries.
Tesla previously stated that it would launch a low-cost model at the beginning of the year (priced $5,000-$7,000 below Model 3/Y) and a revamped Model Y (potentially launching first in the U.S./China). The low-cost model could help boost deliveries amidst the elimination of the U.S. electric vehicle tax credit, but it would have a diluting effect on profit margins.
Analysts also hold a relatively cautious view of the commercialization prospects for Tesla's other projects.
HSBC warned that although the outlook for autonomous vehicles is exciting, regulatory approval and commercialization may not happen until after 2026. The market may also underestimate the capital and operational costs related to the robotaxi fleet. As for Tesla's other ideas (FSD, Optimus, AI, etc.), the commercialization prospects are equally unclear and may take several years.