Thursday's first annual sales decline by Tesla, which sank a stock that has skyrocketed since Donald Trump's victory on optimism Elon Musk's close relationship to the president-elect will help the company.
Thanks to 0% financing, free charging, and low-priced leases, Tesla's worldwide vehicle sales jumped 2.3% in the final quarter. But that was insufficient for the most valuable asset owned by billionaire Musk to overcome a slow beginning of 2024.
From October through December, the Austin, Texas company sold 495,570 cars, increasing delivery to 1.79 million for the whole year. That was 1.1% below 1.81 million, the total demand for electric vehicles in the United States and abroad slowed.
Based on numbers from analytics company Global Data, Tesla's first year-over-year sales decline since 2011. In 2010 the company sold 1,306 cars; that dropped just slightly to 1,129 the next year.There was a cost for the fourth-quarter surge. The lowest average sales price expected by analysts polled by FactSet in at least four years—just over $41,000 in the quarter.
That does not port well for Tesla's fourth-quarter results on Jan. 29 or stock performance dropped more than 7% Thursday.
Musk is a frequent visitor to Trump's Mar-a-Lago resort in Florida and gave more than $250 million to his effort. Since the election, Tesla investors have pushed the stock up more than 50% in anticipation of the new government simplifying electric vehicle rules and attending to other Musk policy concerns.
Tesla projected in 2022 that its sales would rise 50% most years, but its forecast ran against an aging model lineup and more competition in China, Europe, and the United States. Analysts in the United States say most early adopters of technology already own electric vehicles, and more mainstream consumers have questions about range, cost, and the ability to locate charging stations on longer travels.
The fourth-quarter deliveries lagged far behind Wall Street projections. Data provider FactSet's analysts projected 498,000 vehicles in sales.
Early in the year declining sales resulted in once unheard-of discounts for the automaker, so affecting its industry-leading profit margins.
As they try to slink away at the company's market share, legacy and startup automakers' rivalry is also intensifying.
Despite the sales decline, Wedbush's financial analyst Daniel Ives believes the stock is still worthy of purchase.
"We have always viewed Musk and Tesla as a leading disruptive technology global player, not as a car company," said Ives. And the first component of this grand strategic vision has started to take shape.
Although record for Tesla, Morningstar Analyst Seth Goldstein said the fourth-quarter sales indicate the company's aging model lineup is reaching saturation in the entry level luxury vehicle market.
Apart from the limited appeal Cybertruck has, Tesla's newest customer model is the Y small SUV, which first went on sale in 2020.The fourth-quarter deliveries lagged far behind Wall Street projections. Data provider FactSet's analysts surveyed expected sales of 498,000 vehicles.
Early in the year declining sales resulted in once unheard-of discounts for the automaker, so affecting its industry leading profit margins.
As they try to slink away at the company's market share, legacy and startup automakers' competition is also intensifying.
Despite the sales decline, Wedbush's financial analyst Daniel Ives believes the stock is still worthy of purchase.
"We have always viewed Musk and Tesla as a leading disruptive technology global player, not as a car company," said Ives. And the first component of this grand strategic vision has started to take shape.
Although record for Tesla, Morningstar Analyst Seth Goldstein said the fourth-quarter sales indicate the company's aging model lineup is reaching saturation in the entry level luxury vehicle market.
Apart from the limited appeal Cybertruck has, Tesla's most recent consumer model is the Y small SUV, which first went on sale in 2020.
The company will have to develop a vehicle in the mid $30,000s to appeal to more mainstream buyers who might be considering gas, electric or hybrid vehicles in order to meet Tesla management's direction of 20% to 30% annual sales growth this year.
According to Goldstein, Tesla has floated the idea of a new Model Y variant costing in the mid-30,000s that might be smaller inside than the present Y with less features.
"At that point you're equivalent to some Hondas and Fords and GMs," Goldstein remarked. "It gets you from the luxury market to the more reasonably priced car market."
Vice president of automotive research Global Data Jeff Schuster said Tesla is up against fierce competition globally from EV manufacturers in China, the United States, and elsewhere many of which are selling EVs to more mainstream consumers. "They must expand to other sizes and price points if they wish to keep seeing the increase they have," he advised.
Musk's backing of Trump for U.S. president also might be alienating some consumers who lean toward Democrats and might be more ecologically sensitive. A bigger group of consumers would find appeal in a more expansive, less expensive lineup, he remarked. "I suppose the political decisions he's taken don't fit a good bit of his buyers' profile," Schuster said.
According to industry analysts, Tesla used to be the only manufacturer with reliable electric cars; but, today others like China's BYD have more to offer.
Right now, manufacturers of electric cars have 75 models for sale in the United States Though they are still rising, electric vehicle sales in the United States slowed during the first nine months of last year.
Motorintelligence.com estimates that new EV sales increased 7.2% to roughly 936,000 in the United States through September. That marks slower expansion than the 47% rise in 2023. Still, EV sales this year probably will exceed the 1.19 million mark set last year. Most other companies will report Friday full-year sales.
With just 23,640 of its more expensive models including X and S as well as the new Cybertruck, nearly all of Tesla's sales last quarter came from the smaller and less expensive Models 3 and Y.
With 1.77 million electric vehicles announced Thursday that total jumped 41% last year, Tesla's worldwide sales edged out Chinese rival BYD. The company is fighting Tesla for the top selling EV manufacturer worldwide.
Fourth quarter output of 459,445 vehicles was less than total deliveries for the quarter, and full year production of 1.77 million was less than annual sales.
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