Tesla reported a sharp drop in profit for 2024, with its operating profit falling 23% in the final three months of the year. The company’s sales rose 2% to $25.7 billion in the fourth quarter, but fell short of expectations. The decline is attributed to increased competition from rivals such as BYD in China and BMW in Europe.
Tesla’s reliance on two models, the Model 3 sedan and Model Y sport utility vehicle, has limited its car sales growth. Rivals offer a wider selection of electric vehicles, which has led to a decrease in Tesla’s market share. In the US, Tesla’s share of the electric vehicle market fell to 44% in the final quarter of the year.
The company’s revenue was boosted by $692 million in sales of regulatory credits to other automakers. However, this revenue stream is under threat due to potential repeal of regulations allowing such sales. Despite the challenges, Tesla remains one of the few carmakers generating profits on electric vehicles.
Tesla has announced plans to expand its product lineup, including a new Model Y variant and “more affordable” models expected in the first half of the year. The company also plans to introduce self-driving vehicles, including the Cybercab, in 2026. Elon Musk has stated that these developments will be pivotal for Tesla’s future growth.
Investors have largely overlooked Tesla’s lackluster financial performance, focusing instead on Musk’s promises to produce self-driving “cybercabs” and generate trillions of dollars in revenue. However, regulatory hurdles and potential changes to tax incentives may impact the company’s prospects.
Source: https://www.nytimes.com/2025/01/29/business/tesla-earnings-elon-musk.html