Tesla on Thursday posted its first annual sales decline in more than a dozen years, triggering a decline in inventory that has soared since Donald Trump’s victory on optimism that CEO Elon Musk’s close relationship with the president-elect will affect the company.
Global Tesla car sales rose 2. 3% last quarter thanks to zero financing, flexible charging, and cheap leases. But it wasn’t enough for billionaire Musk’s top-value inventory to triumph over a slow start through 2024.
The company, based in Austin, Texas, sold 495,570 vehicles from October through December, boosting deliveries to 1.79 million for the full year. But that was 1.1 per cent below 2023 sales of 1.81 million, as overall demand for electric vehicles in the United States and elsewhere slowed.
The year-on-year drop in global sales is Tesla’s first since 2011, according to figures from analytics company Global Data. The company sold 1,306 vehicles in 2010, but that number dropped to 1,129 the following year.
The fourth quarter momentum came at a cost. Analysts surveyed through data provider FactSet expected Tesla’s average sales value to fall to just over $41,000 in the quarter, the lowest in at least four years. This doesn’t bode well for Tesla’s fourth-quarter results, which the company said it would announce on January 29. Tesla shares fell more than seven percent on Thursday.
Musk has donated more than $250 million to Trump’s re-election crusade and is a regular guest at the president-elect’s Mar-a-Lago hotel in Florida.
Tesla investors have increased inventory more than 50% since the November election in hopes that new management will simplify electric vehicle regulations and address Elon Musk’s other policy priorities.
In 2022, Tesla predicted that its sales would grow by 50 per cent most years, but the prediction ran into an aging model lineup and increased competition in China, Europe and the U.S.
In the United States, analysts say most early adopters of this generation already own electric vehicles, and more classic buyers are concerned about range, price and the ability to charge stations for longer trips.
Fourth-quarter deliveries missed Wall Street estimates. Analysts surveyed via FactSet forecast sales of 498,000 vehicles.
The company made headlines this week when a Cybertruck, one of its signature models, caught fire and exploded outside a Trump hotel in Las Vegas. Firework mortars and filled camping fuel cans were discovered in the rear of the vehicle, according to authorities, and Musk said in a post that they were unrelated to the Cybertruck itself.
1 dead after Tesla Cybertruck explodes outside Trump hotel in Las Vegas
Falling sales earlier this year led to never-before-seen cuts for the automaker, reducing its profit margins, one of the most productive in the industry. Competition from existing automakers and startups is also intensifying as they try to eat into Tesla’s market share.
Daniel Ives, a financial analyst at Wedbush Securities, said he believes the stock is still worth buying despite the decline in sales.
“We have never viewed Tesla simply as a car company…. instead we have always viewed Musk and Tesla as a leading disruptive technology global player,” Ives wrote in a note to clients. “And the first part of this grand strategic vision has taken shape.”
The fourth-quarter sales, while a record for Tesla, show that the company’s old-style line is achieving saturation in the market for entry-level luxury vehicles, said Seth Goldstein, an analyst at currency company Morningstar.
Almost all of Tesla’s sales came from the smaller, less expensive Model 3 and Model Y, and the company only sold 23,640 of its most expensive models, adding the X and S, as well as the new Cybertruck.
In addition to the Cybertruck, which has appeal, Tesla’s newest mainstream style is the Y, a small SUV that first went on sale in 2020.
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