Tesla's stock price declines following the announcement of its first annual delivery decrease.

• Tesla's vehicle production and deliveries report for the fourth quarter and year-end coincides with a significant increase in the company's stock price towards the end of the year.
• Despite CEO Elon Musk's warning of slower growth in the first quarter, the latter part of the year saw improved results.
• Now, Tesla, which previously dominated the electric vehicle market, faces intense competition from Hyundai and BYD.

On Thursday, the company released its fourth-quarter vehicle production and deliveries report. The following are the significant figures:

Total deliveries Q4 2024: 495,570

Total production Q4 2024: 459,445

Total annual deliveries 2024: 1,789,226

Total annual production 2024: 1,773,443

In 2023, Tesla reported 1.81 million deliveries, but in the fourth quarter, it experienced its first annual drop in annual delivery numbers with 484,507 deliveries.

Tesla shares were down more than 4% in pre-market trading Thursday.

Tesla was predicted to deliver 504,770 vehicles in the quarter, including 474,000 Model 3 and Model Y EVs, according to a consensus of estimates compiled by StreetAccount. However, Tesla sent some investors a company-compiled delivery consensus of 506,763 vehicles, based on a survey of 26 analysts. A widely followed independent Tesla researcher, who publishes as Troy Teslike, predicted deliveries of 501,000.

While Tesla reports sales, deliveries are the most accurate measure of revenue, but the company does not provide a precise definition of deliveries in its shareholder communications.

Tesla's stock finished 2024 up 63%, after a huge late-year rally that saw its shares reach a record high in mid-December, surpassing their prior all-time high from 2021.

In the first quarter, the stock dropped 29%, its worst performance since 2022, as the company struggled with declining sales despite price cuts and incentives for buyers. During the first-quarter earnings call in April, CEO Elon Musk informed investors that although he anticipated "higher sales this year than last year," the growth rate would decrease from 38% in 2023.

In the latter part of the year, the most significant development at Tesla was Musk's involvement in President-elect Donald Trump's election campaign. Musk, the wealthiest individual globally, contributed approximately $277 million to support Trump and other Republican candidates, and spent several weeks traveling across swing states to campaign.

Elon Musk, who runs SpaceX, xAI, and owns social network X, has been appointed to co-lead an advisory group to the Trump administration with the goal of reducing federal spending, personnel, and regulations.

According to Sam Fiorani, a vice president at industry research group Auto Forecast Solutions, Musk's involvement in politics may have diverted his attention from his core businesses. However, the extent to which investors or EV buyers are concerned about this won't be reflected in Tesla's financial results until the first quarter, Fiorani stated in an email to CNBC.

Recently, Tesla has been facing competition from domestic automakers such as General Motors, Ford, and BYD in China, as well as Hyundai in Korea and European auto giants like Volkswagen and BMW.

Patrick George, editor in chief of InsideEVs, stated to CNBC that although Tesla excels in several areas, particularly its charging network, its biggest operational challenge in the recent quarter was managing the intricacies of being an automaker.

'Piling up on used car lots'

Tesla is investing in humanoid robotics and chip development, and plans to launch a dedicated robotaxi and driverless ride-hailing service before 2027. Despite Musk and shareholders' desire to see Tesla as more than just a car company, most profits still come from vehicle sales.

Tesla made a mistake by not bringing "more affordable EVs in 2024," according to George, who also pointed out that Cybertrucks, the company's newest vehicle, are "piling up on used car lots." The angular steel Cybertruck starts at around $80,000.

During the fourth quarter, Tesla experienced a sharp decline in sales in Europe due to increasing competition in the region.

In Europe, Tesla sold 283,000 vehicles from January to November, which is a 14% decrease from the same period last year, according to ACEA registration data. The number of registrations in Europe fell from 31,810 in November to 18,786 a year earlier.

The company's business in China was also pressured in the fourth quarter.

Fiorani stated that although the Model Y is the second most popular model in China, "its growth rate is not keeping pace with the growth of the market." Despite a more than 5% increase in sales of the Model Y through November, overall EV sales in the country grew by 8%, he said.

In China, brands such as BYD, Chery, Li Auto, Jetour, LeapMotor, and Aito experienced significant growth, outpacing Tesla. Additionally, BYD is expanding its operations beyond China and exporting in large quantities.

Despite offering incentives and price cuts on its popular Model Y SUV, Tesla experienced a buildup of inventory in North America during the fourth quarter.

The company sent Cybertruck assembly line workers home for a few days during the fourth quarter, hinting at the possibility of avoiding an oversaturated market with too many vehicles.

In an earnings call in October, Musk stated that Tesla anticipates providing lower-cost and self-driving cars by 2025, which is expected to result in a growth rate of 20% to 30% compared to 2024.

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