Tesla's Q4 Disappoints: Growth Slows Year Over Year

Tesla's (TSLA) Q4 2024 delivery figures have been released, and the results are in: 495,570 vehicles delivered, falling short of analyst expectations and marking a slowdown in annual delivery growth compared to 2023. Let's dive into the numbers and explore the factors contributing to this disappointing performance.

Tesla delivered a total of 495,570 vehicles in Q4 2024, missing the FactSet consensus of 498,000 units and other estimates of around 506,000 units. While this figure represents a 7.1% increase from the previous quarter (Q3 2024), it falls short of the expected growth and marks a slowdown in annual delivery growth compared to 2023.



Several factors contributed to Tesla's disappointing Q4 performance and the slowdown in annual delivery growth:

1. Reduced European subsidies: Lower incentives for electric vehicles in Europe negatively impacted Tesla's sales in the region. This is evident in the 24% drop in Tesla vehicle registrations in Europe in October 2024 (JATO Dynamics).
2. Shift in U.S. demand towards lower-priced hybrid vehicles: The U.S. market saw a shift in consumer preferences towards more affordable hybrid vehicles, which may have led to a decrease in demand for Tesla's higher-priced electric vehicles.
3. Tougher competition from China's BYD: The rise of BYD, another major electric vehicle manufacturer from China, increased competition in the global EV market, potentially leading to a decrease in Tesla's market share.
4. Inadequate promotions and incentives: Despite Elon Musk's expectation of "slight growth" in deliveries, promotions like zero-interest financing failed to boost demand for Tesla's aging lineup of models. This suggests that the incentives offered were not sufficient to drive significant growth in sales.
5. Focus on self-driving taxis and political involvement: Elon Musk's pivot towards self-driving taxis and his political involvement, including backing President-elect Donald Trump, may have diverted resources and attention away from core business operations, potentially impacting sales growth.

Tesla's slowdown in annual delivery growth had a significant impact on its stock price and market valuation in 2024. Despite a 62.5% gain in the fourth quarter, Tesla stock retreated 3.25% to 403.84 on Tuesday, booking a fourth straight loss and closing below the 21-day moving average for the first time since Oct 24. This decline can be attributed to the company's failure to meet its target of annual vehicle unit growth compared to 2023, as well as the slowdown in the U.S. and Europe markets. Additionally, Tesla's market capitalization fell to $1.24 trillion, reflecting investor concerns about the company's growth prospects.

In conclusion, Tesla's Q4 2024 delivery figures disappointed, with growth slowing year over year. The slowdown can be attributed to several factors, including reduced European subsidies, shifting consumer preferences, increased competition, and inadequate promotions. As a result, Tesla's stock price and market valuation were negatively impacted in 2024. Investors should closely monitor Tesla's performance and the broader EV market to assess the company's future growth prospects.