Tesla Inc. has reported a decline in year-over-year delivery growth for the first time since its inception, delivering 1.79 million vehicles in 2024. This represents a 1% decrease compared to 2023, leaving investors questioning the company’s ability to maintain its ambitious growth targets.
Impact on Tesla Shares
The disappointing results led to a 6% tumble in Tesla shares on Thursday, reflecting the market’s disappointment.
Fourth Quarter Deliveries Fall Short of Expectations
In the fourth quarter of 2024, Tesla delivered approximately 496,000 vehicles, which was a 7% sequential increase and a 2% rise year-over-year. However, this still missed Wall Street consensus estimates, which ranged from 500,000 to 510,000. Production numbers were also underwhelming, with 459,000 vehicles produced in the fourth quarter, marking a 2% decline quarter-over-quarter and a 7% drop year-over-year.
According to Goldman Sachs analyst Mark Delaney, “weakness in Europe was offset by growth in China, and that U.S. deliveries were down modestly year-over-year, with growth from Cybertruck offset by declines in other models.”
Revised 2025 Delivery Estimates
Goldman Sachs has lowered its 2025 delivery estimates for Tesla to 2.01 million vehicles, down from its prior estimate of 2.03 million. This implies a 12% year-over-year growth, but falls short of Tesla’s own target of 20%-30% annual growth. Delaney emphasized the importance of Tesla’s upcoming models in achieving higher growth, stating that “the degree to which the features and costs of new model(s) are differentiated enough versus what Tesla currently provides, and when Tesla launches new models, will be key variables in determining how fast Tesla grows.”
Earnings-per-Share Estimates Revised
Goldman Sachs has also lowered its 2024 earnings-per-share estimate from $2.01 to $2 and its 2025 EPS estimate from $2.85 to $2.80.
Full Self-Driving Progress and Robotaxi Potential
Tesla continues to make strides in its Full Self-Driving software, with version 13 rolled out to customers in late 2024. While the company appears to lead in autonomous vehicle technology, the road to achieving a level of safety superior to human drivers remains challenging. Goldman Sachs indicates that Tesla is unlikely to reach this goal by the second quarter of 2025 but suggests that the company could launch a limited robotaxi service in the next 12-24 months using remote assistance.
Neutral Rating and Price Target
Despite the short-term headwinds, Goldman Sachs has reiterated its 12-month price target of $345 for Tesla stock, holding a Neutral rating. The firm highlighted fundamental challenges to the core auto business but recognized the potential for stronger long-term growth driven by software and services.