Big Fall: Tesla Shares Drop 7% After Sales Miss Wall Street Expectations - Cybertruck Delay or Demand Issues?

Tesla’s stock took a significant hit on the first trading day of 2025, dropping as much as 7% following the release of the company’s annual delivery figures, which fell short of Wall Street's expectations. Despite a strong finish in the fourth quarter, Tesla’s overall sales for 2024 showed signs of slowing, sparking concerns about the company’s future earnings and its position in the highly competitive electric vehicle market. This marks Tesla’s first sales decline in nine years.

Tesla Annual Sales Decline and Sluggish Demand
According to an Associated Press report, Tesla saw a modest 2.3% increase in global sales during Q4 2024, after a slow start to the year. However, the company experienced its first year-over-year sales decline since at least 2015. Tesla delivered 495,570 vehicles between October and December, bringing the total number of vehicles delivered in 2024 to 1.79 million. While this showed a boost compared to earlier quarters, it still represented a 1.1% drop from 2023, when Tesla had sold 1.81 million vehicles.

Price Cuts and Discounting Push Profits Lower
To stimulate demand, Tesla implemented aggressive pricing strategies, including 0% financing, free charging, and discounted leases. While these moves helped drive sales, they also led to a significant reduction in the company’s average sales price, which analysts predict will fall to just over $41,000 in Q4—its lowest level in at least four years. The price cuts, while boosting volume, have impacted Tesla’s profit margins, which had been a key driver behind its market dominance.

Wall Street Missed Expectations
Tesla’s fourth-quarter delivery data was particularly underwhelming, missing Wall Street’s expectations of 498,000 deliveries. Despite the drop in stock price, Tesla shares have still risen over 50% over the past year, largely due to market optimism following the election victory of Donald Trump. As the company enters 2025, investors will be closely watching whether Tesla can rebound in the face of mounting competition and continued price pressures.