Tesla's annual sales have seen a decline for the first time, and this year's growth target of 20-30% is also in jeopardy?

Wall Street is currently concerned that after Tesla's annual sales declined for the first time in over a decade, the company's growth targets for this year are also "hanging by a thread."

Analysts warn that weak production in the fourth quarter may indicate weak sales in the first quarter of 2025, which will raise doubts in the market about Tesla's ambition for a 20-30% increase in delivery volume in 2025.

First Annual Sales Decline Since Going Public

On January 2nd, Eastern Time Thursday, Tesla announced its vehicle delivery data for the full year and fourth quarter of 2024. The data shows that Tesla produced approximately 1.773 million pure electric vehicles in 2024 and delivered about 1.79 million cars, which is lower than the 1.8 million delivered in 2023 and below the general expectation of analysts for 1.8 million, marking the first annual sales decline for Tesla since its IPO in 2011.

The fourth quarter data is also disappointing. In the fourth quarter of 2024, Tesla produced approximately 459,000 vehicles, below analysts' expectations of 505,000, and delivered about 496,000 cars, setting a new quarterly delivery record, but still falling short of the average analyst expectation of about 512,000.

The only bright spot comes from the energy storage business. Tesla installed 11 GWh of energy storage products in the fourth quarter, a year-on-year increase of 245% and a quarter-on-quarter increase of 60%, exceeding consensus by 15%.

Regarding the fourth quarter data, HSBC commented that weak production may indicate weak sales in the first quarter of 2025, which will raise doubts in the market about Tesla's ambition for a 20-30% increase in delivery volume in 2025.

UBS stated that the fourth quarter delivery volume exceeding production has led to a decrease in Tesla's inventory. The company may have slowed down production of the Model Y at the Texas Gigafactory, possibly to prepare for new low-cost models. The production speed of the Cybertruck may also have slowed.

Guidance Will Be Key in End-of-Month Earnings Report

For the upcoming earnings report on January 29th, HSBC stated, considering the weak delivery and production in the fourth quarter, the company’s earnings are expected to decline quarter-on-quarter (the company already hinted at this in the third quarter), and there is still some room for positive surprises regarding the release of Full Self-Driving (FSD) and regulatory credits.

HSBC emphasized that investors should focus on Tesla's guidance for 2025—especially whether Tesla will reaffirm its annual growth target of 20-30% (HSBC's expectations, market consensus, and third-party data providers are all below this target).

UBS noted that although the market is currently pessimistic about Tesla's sales expectations for 2025 (with UBS's growth forecast only at 8%), the delivery volume in 2025 could still be driven by new models.

Tesla previously stated that it would launch a low-cost model at the beginning of the year (priced $5,000-$7,000 lower than the Model 3/Y) and a refreshed Model Y (possibly launching first in the U.S. / China). The low-cost model may help boost delivery volumes in the U.S. amid the cancellation of electric vehicle tax credits, but it will dilute profit margins Analysts also hold a relatively cautious attitude towards the commercialization prospects of Tesla's other projects.

HSBC warned that although the prospects for autonomous vehicles are exciting, regulatory approval and commercialization may not occur until after 2026. The market may also be underestimating the capital and operational costs associated with taxi fleets. As for Tesla's other ideas (FSD, Optimus, artificial intelligence computing, etc.), the commercialization prospects are similarly unclear and may take several years.