Sales growth declined in 2024 for the first time in more than a decade.
The leading electric vehicle manufacturer, Tesla (NASDAQ:TSLA), has seen its stock price plummet some 12% year-to-date as it struggles with declining sales.
The EV maker has been on an incredible growth trajectory in recent years. In 2021, deliveries, which is a metric used to track sales, rose about 87%, followed by a 35% increase in 2022, and a 38% jump in 2023.
Last year, Tesla sales hit a wall, as deliveries declined roughly 1% to 1.79 million, from 1.81 million the year before. It was the first time that annual global deliveries have dropped in more than 10 years.
It resulted in automotive revenue falling 6% in 2024 to $77.1 billion. Overall revenue ticked up 1% last year due to a 67% rise in energy generation and storage revenue to $10.1 billion and a 27% increase in services and other revenue to $10.5 billion.
The 12% decline in the stock price year-to-date follows what was a strong year for Tesla stock, as it rose 62%, following a 102% increase in 2023. The increase last year may have been buoyed by CEO Elon Musk’s foray into politics, as he became a central figure in Donald Trump’s winning campaign for president. He was even tapped to lead Trump’s newly created Department of Government Efficiency.
Could politics be impacting Tesla sales?
Musk and DOGE have been busy proposing massive budget cuts in recent weeks, which may, in fact, be contributing to the Tesla backlash, as a CNN story published on Monday posed. The story cited a recent Quinnipiac University poll that said 53% of Americans disapprove of Musk playing a prominent role in the Trump Administration, while 39% approve.
Further, the CNN report said that, according to S&P Mobility, repeat buyers of Tesla’s in blue states fell from 72% in Q4 2023 to 65% in Q4 2024. Meanwhile, repeat buyers of Tesla’s in red states ticked up from 47.6% in Q4 2023 to 48.2% in Q4 2024. In California alone, Tesla sales fell 12% in 2024, while EV sales overall were up, signaling a declining market share for Tesla.
Also, January Tesla sales numbers have dropped in January for several nations, including the UK, France, Sweden, Norway, and the Netherlands, according to USA Today.
In the outlook for 2025, Tesla officials expect to see the car business return to growth in 2025. Tesla has been investing heavily in autonomous, or self-driving, vehicles, which could get a boost from a Trump Administration that has signaled its support for them. Tesla intends to launch a robotaxi business this year in parts of the U.S.
“2025 will be a seminal year in Tesla’s history as FSD (supervised) continues to rapidly improve with the aim of ultimately exceeding human levels of safety,” officials said in the Q4 earnings report.
The bigger problem for Tesla stock is its ridiculously high valuation. After two years of huge gains, it is trading at a meteoric 174 times earnings and 124 times forward earnings. The correction here in 2025 is due. While Tesla could right the ship long term as it moves toward autonomous vehicles, the high valuation seems unsustainable right now.
