Tesla Stock Drops 6% on Annual Sales Decline Despite Record Q4 Deliveries as BYD Closes in Fast

Tesla (NASDAQ: TSLA) stock price fell by over 6% on 2nd January to close at £305.67 ($379.28) as the Elon Musk-owned EV company's 2024 deliveries declined to 1.78 million units from 1.8 million in the year prior.

Yesterday, Tesla disclosed that it delivered 495,570 EVs in Q4, a quarterly record for the company, but it missed analysts' estimates of 510,400 units.

The annual sales mark Tesla's first year-over-year decline as it faces stiff competition from global rivals. China's BYD (BYDDY) delivered nearly 4.3 million passenger vehicles last year, of which 1.76 million were pure EVs and the remainder were hybrids.

Tesla also deployed a record 11 GWh of energy storage products in Q4, bringing the total 2024 deployments to 31.4 GWh.

Tesla Had Previously Warned Of Lower Car Volume Growth

Growing competition, demand diversification, and the overall global economic landscape collectively affected Tesla's production and delivery output.

However, the company had cautioned last year that its "vehicle volume growth rate may be notably lower than the growth rate achieved in 2023," citing the prioritisation of plans to roll out its next-gen vehicle at its Gigafactory in Texas.

However, until recently, the company posted a 50% compound annual growth rate, and investors weren't expecting an annual delivery decline.

Top Analyst Describes Tesla Q4 Results As a Temporary Blip

Wedbush analyst Dan Ives wrote to investors today that the brokerage is optimistic about Tesla's potential to speed up delivery growth this year, with 20%-30% delivery growth targets.

He highlighted that the company's rollout of its lower-priced EV early this year would also "spur growth for vehicle deliveries."

Furthermore, Ives explained that the growing uptake of Tesla's full self-driving software, the robotaxi testing, and offerings like the Cybercab could take Tesla's market cap beyond £1.61 trillion ($2 trillion).

Bearish Analysts Wonder If Cybertruck Is A 'Bust'

Tesla reportedly sold only 15,000 Cybertrucks in Q4 and up to 40,000 units in 2024, which is far from the company's initial claim of 2 million orders for the vehicle.

The underperformance made Bernstein analysts question whether the Cybertruck is a "bust." The brokerage opined that the Cybertruck isn't gross margin positive as they find it difficult to see a clear future for the product, given its niche demand.

"We highlight Cybertruck as a massive strategic miscalculation and opportunity cost for Tesla, given that it took four years to develop, and inevitably diverted attention away from a lower priced offering, which Tesla is now in desperate need of," analysts led by Toni Sacconaghi noted.

Downward pressures on the Tesla stock could also be aggravated by the Cybertruck explosion reportedly carried out by a 37-year-old active-duty US special forces soldier, Matthew Alan Livelsberger, at the Las Vegas Trump Hotel entrance on 1st January.

The incident took place hours after a US military vet rammed a rented EV pickup into a crowd on Bourbon Street in New Orleans.

On the incident, Musk wrote on X, formerly Twitter: "The evil knuckleheads picked the wrong vehicle for a terrorist attack. Cybertruck actually contained the explosion and directed the blast upwards," and the explosion was unrelated to the vehicle.

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