Tesla (NASDAQ:TSLA) reported a sharp decline in fourth-quarter net income, with profits dropping 71% compared to the same period in 2023.
The electric vehicle giant, led by Elon Musk, posted earnings of $2.31 billion from October through December, significantly lower than the $7.93 billion it made in the previous year when results were boosted by a one-time tax benefit.
Despite a 3% increase in adjusted earnings per share to 73 cents, Tesla still fell short of analysts’ expectations of 77 cents per share.
Revenue for the quarter increased 2% to $25.7 billion, also missing Wall Street’s forecast of $27.1 billion, according to FactSet.
The modest revenue growth came as Tesla aggressively pushed incentives such as low-interest loans, price cuts, 0% financing, free charging, and low-cost leases to boost demand for its vehicles.
However, these strategies were not enough to prevent Tesla’s first annual sales decline in over a dozen years, with 1.79 million vehicles sold in 2024.
Despite the yearly decline, the fourth quarter showed signs of recovery, with Tesla selling a record 495,570 vehicles, signaling potential momentum heading into 2025.
The earnings miss comes at a critical time for Tesla as it navigates increasing competition in the EV market, macroeconomic uncertainties, and shifting consumer demand.