Tesla finds itself embroiled in a federal investigation concerning its full self-driving feature, which has been linked to multiple fatal crashes across the United States. This development comes amid disappointing delivery numbers for the electric vehicle giant, indicating a struggle to attract new customers throughout the previous year. The company's challenges were further compounded by two judicial rejections of CEO Elon Musk's $56 billion compensation package.
Amid these challenges, Tesla faces a shifting market landscape. The U.S. President's threat to impose tariffs on goods from China could potentially benefit Tesla by disadvantaging Chinese competitors. Meanwhile, some Wall Street analysts predict that demand for Tesla vehicles might increase following an anticipated cut in interest rates by the US Federal Reserve.
Tesla's fierce competition with cheaper alternatives from companies like China's BYD has intensified. BYD surpassed Tesla in the final quarter of 2023, becoming the world's leading manufacturer of electric vehicles. However, Tesla managed to reclaim the top spot for the first three quarters of 2024, aided by significant price cuts. Despite these efforts, the reduction in European subsidies for electric cars has adversely affected Tesla's performance in that region, with October registrations of its vehicles plummeting by 24%.
Financially, Tesla reported earnings of $0.73 per share and revenue of $25.71 billion, both figures falling short of Wall Street expectations. Analysts had projected revenue of $27.22 billion. Consequently, Tesla's shares decreased by approximately 4% in after-hours trading following the earnings announcement.
Despite these setbacks, Tesla's stock price has experienced remarkable growth over the past year, climbing more than 100% and rising 75% in just the last six months. However, the company is facing its first annual decline after consistently failing to meet quarterly delivery targets throughout 2024.