The company's shares dropped approximately 6%. Musk had previously forecasted "slight growth" in deliveries for 2024 and introduced various promotions, including interest-free financing and complimentary fast-charging, to stimulate sales.
However, diminished subsidies in Europe, a trend in the United States favoring more affordable hybrid vehicles, and intensified competition, particularly from China's BYD, negatively impacted Tesla.
Morgan Stanley analysts noted that the presence of Tesla's older models and the increased availability of less expensive alternatives overshadowed the company's heightened promotional efforts.
In response to the declining demand for electric vehicles, Musk has shifted his attention to developing a self-driving taxi service, which is anticipated to enhance Tesla's market value.
Additionally, he has supported President-elect Donald Trump with substantial campaign contributions, and analysts predict that the new administration may implement more favorable regulations for Tesla in the future.
Nevertheless, with self-driving technology still in the developmental stage and years away from being commercially viable, analysts suggest that Tesla will need to depend on its promised lower-cost versions of existing models and the success of the Cybertruck to meet Musk's goal of achieving 20% to 30% sales growth by 2025.
The Cybertruck, recognized for its unconventional design, has begun to show signs of weak demand.
Tesla has not yet released delivery figures for the Cybertruck. On Thursday, the company reported delivering 471,930 Model 3 and Model Y vehicles, along with 23,640 units of other models, including the Model S sedan, Cybertruck, and Model X premium SUV.
In total, Tesla delivered 495,570 vehicles in the quarter ending December 31, falling short of the estimated 503,269 units, based on a survey of 15 analysts conducted by LSEG. The company produced 459,445 vehicles during this period, representing a decline of approximately 7% compared to the previous year.
Deliveries for 2024 reached 1.79 million units, reflecting a 1.1% decrease compared to the previous year and falling short of the projected 1.806 million units, as reported by 19 analysts surveyed by LSEG.
Tesla outperformed its competitor BYD, which saw a 12.1% increase in battery-electric vehicle sales, totaling 1.76 million in 2023, driven by competitive pricing and an enhanced focus on Asian and European markets.
Tesla's stock experienced a significant rise of over 60% in 2024, following Trump's election, with notable backing from Musk.
Musk has indicated his intention to utilize his anticipated position as a government-efficiency advocate in the Trump administration to push for a streamlined federal approval process for autonomous vehicles, aiming to replace the current complex state-specific regulations, which he has labeled as "incredibly painful."
The company's Autopilot and "Full Self-Driving" features, which are not yet fully autonomous, have faced scrutiny due to ongoing lawsuits, investigations by U.S. traffic safety regulators, and a criminal inquiry by the Department of Justice.
A primary concern is whether Tesla has exaggerated the self-driving capabilities of its vehicles.
Additionally, Tesla is facing challenges from traditional automakers. In October, its registrations in Europe dropped by 24%, as the Volkswagen Group's Skoda Enyaq SUV surpassed Tesla's Model Y to become the top-selling electric vehicle in the region, according to data from JATO Dynamics.
Trump's administration is reportedly contemplating the elimination of the $7,500 tax credit for electric vehicle purchases, a decision that could hinder the already slowing transition to electric vehicles in the U.S., as reported by Reuters in November.
Thomas Martin, senior portfolio manager at Globalt Investments, noted, "Interestingly, their sell-through also declined this year, despite the awareness of a potential tax credit removal in 2025. This lack of acceleration may be significant."