After the U.S. Presidential elections sent Tesla (TSLA) stock from sub-$250 to as high as $488.54, Thursday’s bad news changed everything.
For the first time in its history, Tesla posted its first yearly sales decline. TSLA stock dropped by 6.08% when the firm reported fourth-quarter deliveries missing expectations. The firm delivered 495,930 vehicles, compared to the 510,400 that analysts expected (data from Bloomberg). For the year, Tesla delivered 1.78 million vehicles. This is below 1.8 million total the year before (in 2023). Despite the yearly miss for the first time in its history, electric vehicle fans should have expected it.
The U.S. government is winding down tax credits that incentivize consumers to buy an EV. In the last two years, inflation rates have hurt their disposable income. As a result, people either delayed or gave up on buying high-priced EVs. Instead, they are opting for more practical hybrid vehicles. That way, people will pay a lower price, get the best of both worlds from electric batteries and gasoline, and enjoy a longer range.
Risks
Bears who short-sold TSLA stock but gave up may want to reconsider their bet against the firm. Compound annual growth rates and profit margins will likely keep falling. China is determined to dominate the vehicle market. It is flooding the global market with increasing deliveries. In 2024, BYD (BYDDY) delivered around 4.3 million vehicles.
Li Auto (LI), Nio (NIO) and XPeng (XPEV) also increased deliveries year-on-year.