(Reuters) – Tesla reported its first annual drop in shipments on Thursday, as the automaker shipped fewer electric vehicles than expected in the fourth quarter and incentives failed to boost demand for its aging model line.
The company’s shares fell 3.5% before the bell, as investors worried about the challenges facing CEO Elon Musk, who expected promotions, including interest-free financing, to spur “slight growth” in shipments in 2024 .
Reduced European subsidies, a shift in the U.S. toward cheaper hybrid vehicles and stronger competition from China’s BYD (SZ: ) have pressured Tesla (NASDAQ: ).
In response, Musk pivoted Tesla toward self-driving taxis and backed President-elect Donald Trump with millions of dollars in campaign donations in the hope it could bring regulatory relief for the company.
Tesla delivered 495,570 vehicles in the three months to Dec. 31, short of estimates of 503,269 units, according to 15 analysts polled by LSEG.
471,930 Model 3 and Model Y vehicles and 23,640 units of other models were delivered, including the Model S sedan, Cybertruck and Model X premium SUV. 459,445 vehicles were produced in the period from October to December.
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 say Tesla will have to rely on cheaper versions of its current cars and the Cybertruck to drive sales growth in the near term.
The truck, known for its trapezoidal stainless steel exterior, is showing signs of weak demand, analysts say.
Meanwhile, Tesla’s October registrations in Europe fell 24%, thanks to a tight race from Volkswagen (ETR: ) Group, whose Skoda Enyaq SUV dethroned the Model Y as the region’s best-selling EV, according to data research firm JATO Dynamics.
Lower prices and incentives squeezed Tesla’s profit margin on vehicle sales last year. Wall Street, however, expects demand to increase in 2025 as the US central bank cuts interest rates.
Tesla shares rose more than 60% last year.
