In 2024, Tesla experienced its first annual decline in vehicle deliveries since 2011, signaling a pivotal moment in the electric vehicle (EV) industry. The company delivered approximately 1.79 million vehicles, a 1.1% decrease from the 1.8 million units sold in 2023.
This downturn is attributed to intensified competition, particularly from Chinese automaker BYD, and shifting market dynamics.
Tesla’s Sales Performance in 2024
Despite implementing incentives such as interest-free financing and complimentary fast-charging, the company’s efforts to stimulate demand fell short. The reduction in European subsidies, elevated borrowing costs, and increased competition contributed to the decline. Notably, the Model 3 and Model Y remained the company’s best-sellers, while the newly introduced Cybertruck did not meet anticipated demand levels.
BYD’s Ascendancy in the EV Market
BYD, Tesla’s primary competitor, reported a 12% increase in global EV sales, totaling 1.76 million units in 2024.
This surge is largely due to aggressive pricing strategies and the popularity of its hybrid models, including the affordable Seagull hatchback. BYD’s expansion into international markets, with new manufacturing facilities in Brazil and Southeast Asia, has further solidified its position in the global EV landscape.
Comparative Analysis: Tesla vs. BYD
The narrowing sales gap between Tesla and BYD underscores the intensifying competition in the EV sector. The company’s market capitalization remains significantly higher at $635.35 billion compared to BYD’s $89.50 billion. However, BYD’s price-to-earnings (PE) ratio of 19.23 suggests it may be undervalued relative to its earnings, compared to Tesla’s PE ratio of 56.02.
Market Share Dynamics
Between 2023 and early 2024, both Tesla and BYD experienced slight declines in their global battery electric vehicle (BEV) market shares. Tesla’s share decreased by two percentage points, while BYD’s dropped by one. During this period, BYD’s deliveries were approximately 45,000 units fewer than Tesla’s, highlighting the close competition between the two manufacturers.
Strategic Shifts and Future Outlook
In response to these challenges, Elon Musk has indicated a strategic pivot towards autonomous driving technologies and robotics. The company plans to introduce a more affordable model priced under $30,000 in the first half of 2025 and aims to produce a new autonomous vehicle, the Cybercab, before 2027.
Additionally, Tesla’s energy storage business has demonstrated robust performance, potentially offsetting some of the declines in vehicle sales.
The firm’s first annual sales decline marks a significant development in the EV industry, reflecting the growing influence of competitors like BYD. As market dynamics evolve, both companies are expected to continue innovating and adjusting their strategies to capture consumer interest and expand their market shares.