Jan 2 (Reuters) – Tesla on Friday reported a bigger-than-expected drop in fourth-quarter deliveries and posted a second straight drop in annual sales, as it struggled to boost demand for its electric vehicles following the withdrawal of tax subsidies.
The tally raises questions about whether Tesla can stabilize its core auto business after two straight years of sales declines, even as it pivots toward futuristic projects such as robotics and self-driving cars to justify its lofty valuation.
Tesla said it delivered 418,227 vehicles in the October-December quarter, up from 495,570 a year earlier. Analysts were expecting 434,487 vehicles, according to Visible Alpha.
For the full year, Tesla delivered 1.64 million vehicles, compared with 1.79 million in 2024. Analysts surveyed by Visible Alpha expected deliveries of about 1.65 million vehicles, marking the company’s second consecutive annual decline.
Tesla’s fourth-quarter numbers come after third-quarter deliveries were supported by a rush to secure U.S. EV tax credits before they expire at the end of September, followed by a steeper slowdown as incentives fade.
Demand for electric vehicles has weakened across the industry since late September, when the Trump administration ended $7,500 federal tax credits, and Tesla also faces growing competition globally.
In October, Tesla launched stripped-down “standard” versions of the Model Y and Model 3, priced about $5,000 less than previous base models, as it sought to defend volumes after the loss of the tax credit.
Analysts have said the biggest pressure on Tesla in 2025 has come in North America and Europe, where competition has intensified and the company also faced a brand backlash earlier in the year, tied to Musk’s political rhetoric.
Even as vehicle deliveries have weakened, Tesla shares have risen about 11.4% in 2025, boosting Musk’s wealth.
Investor enthusiasm for Tesla is increasingly focused on Musk’s push to expand robotaxis, improve self-driving technology and build humanoid robots, even though electric vehicle sales still account for the vast majority of Tesla’s current revenue.
(Reporting by Akash Sriram in Bengaluru; Editing by Anil D’Silva)