Despite the disappointing sales and deliveries, Tesla saw its stock price quadruple over the past year to that extent, revealing the electrical vehicle market’s depth of unpredictability.

Tesla reported its fourth-quarter earnings for 2024 on Wednesday after the US stock markets closed. While the financial results for the company indicated a tough sale, the story told by its stock price was different. The company reported $0.73 per share in earnings and revenue of $25.71 billion, which fell short of the expectations of Wall Street, who had projected revenue to be at $27.22 billion. Profit margins also decreased compared to last year.

Shares of Tesla slumped by some 4 percent in after-hours trading following the announcement, revealing investor concerns regarding its performance.
Elon Musk took the platform to unveil his Tesla Cybercab, a self-driving taxi which he claims to be ready for production by 2026, but given the history of delay of Tesla on so many counts, skepticism was there. Musk also revealed that the robotaxi business of the company would be launched in June this year, but the details of its operations are still unknown. Another updated version of the Model Y sedan will be released into the market in March. The company is, however, under federal scrutiny on the alleged involvement of its full self-driving feature in multiple fatal crashes across the United States.

Gigafactory Texas Building June — Larry D. Moore, CC BY 4.0 https://creativecommons.org/licenses/by/4.0, via Wikimedia Commons

“This is not some far-off, mythical situation,” Musk said. “2025 is going to be a pivotal year for Tesla.”

Tesla has faced rising competition, most notably from BYD of China, which dethroned it in the fourth quarter of 2023 to become the world’s leading electric vehicle manufacturer. But Tesla regained the title for the first three quarters of 2024, largely due to aggressive price cuts.

According to its latest earnings report, Tesla recorded 495,570 vehicle deliveries in the fourth quarter and 1.8 million for the entire year. This marked the company’s first annual decline in deliveries after repeatedly failing to meet its quarterly targets throughout 2024.

Challenges in international markets have also contributed to Tesla’s problems. European government subsidies for electric vehicles have been reduced, significantly affecting Tesla’s sales in the region. Tesla registrations in Europe dropped by 24% in October alone. On the other hand, some analysts expect a surge in demand for Tesla once the US Federal Reserve is expected to implement interest rate cuts that will make auto financing more appealing to consumers.

Added to this is the fact that with the latest model, Cybertruck, not so much attracting new customers as it has been touted but in reality very poorly performed since its release. The vehicle was finally unveiled last November 2023 after being delayed for so many years. And at $80,000 per unit, its sales have not recovered the decline in interest in the company’s older models.

Elon Musk has also hinted at the possibility of stepping away from Tesla, following a prolonged legal dispute over his compensation package, initially valued at $56 billion but twice rejected by a judge. His potential departure could have significant implications for Tesla’s leadership and future direction.

Nevertheless, Tesla’s shares have shown impressive resilience. While the company saw a rise of more than 100% over the past year, its value has grown 75% within the last six months. Analysts believe investors are optimistic about the long-run prospects of the company, partly because of political connections of its CEO, Musk. His familiarity with Donald Trump has strengthened expectations that Tesla is likely to profit from friendly regulation and business circumstances. However, Republicans in Congress had threatened to take away tax credits from electric cars previously. Those measures could potentially raise new headwinds against Tesla.
President Biden has promised to impose duties on imports in different categories and on Chinese autos in particular. When that actually happens, a drastic change can occur in the automotive world stage and give the competitive edge over international producers again.

The coming months will tell whether the company’s strategic changes, new products, and factors in the market can help Tesla regain its footing. While analysts may be disappointed with Tesla’s latest earnings report, the company’s trajectory is still unpredictable.