Tesla’s Profit Fell Sharply Last Year

Tesla on Wednesday reported a sharp drop in profit for 2024 as rivals in China, Europe and the United States chipped away at its lead in the market for electric cars.

The company, which is led by Elon Musk, said it made a profit of $2.3 billion during the last three months of 2024. That was a decline compared with $7.9 billion a year earlier, but 2023’s profit included a one-time tax benefit of $5.9 billion. Tesla’s operating profit, which excludes that special gain, fell 23 percent in the final three months of the year.

Sales rose 2 percent to $25.7 billion in the fourth quarter, from $25.2 billion in the same period in 2023.

For the full year, profit was $7.1 billion, Tesla said, down from $15 billion a year earlier. Sales rose to $97.7 billion, from $96.8 billion in 2023.

Tesla also sells batteries used by electric utilities, businesses and homes to store energy from solar panels and other sources. Increased sales of those products helped compensate for lackluster car sales.

The company remains reliant on two models, the Model 3 sedan and Model Y sport utility vehicle, for most of its car sales, while rivals in Asia, Europe and the United States offer a wider and growing selection of electric vehicles.

BYD, based in China, sells more than a dozen electric and plug-in hybrid models, from subcompacts to minivans, and has emerged as Tesla’s biggest challenger outside the United States. Chinese automakers are expected to introduce more than 60 models in the second quarter of this year alone, analysts at HSBC said in a report.

Increased competition and Tesla’s relative lack of new models led to a decline of the company’s market share in China, Europe and the United States last year. Tesla said earlier this month that it sold 1.8 million vehicles worldwide in 2024, slightly less than in 2023. That is a big change for a company that increased car sales 38 percent in 2023 and 40 percent in 2022.

In the United States, Tesla’s share of the electric vehicle market fell to 44 percent in the final quarter of the year, from 51 percent a year earlier, according to Cox Automotive. Tesla has also lost ground in the luxury market. In the United States, BMW sold nearly as many i5 and i7 luxury sedans as Tesla sold Model S cars in 2024; and Rivian sold about 7,000 more of its R1S S.U.V. as Tesla’s Model X, according to Cox.

Sales of Tesla’s newest vehicle, the Cybertruck pickup, which starts at around $80,000, also seem to be flagging. Tesla sold 13,000 Cybertrucks in the fourth quarter, down from 16,700 in the third quarter, according to estimates by Cox.

Tesla has cut prices and offered low-interest financing to increase sales, but the measures have come at the expense of profit. Still, Tesla is one of the few carmakers that make money on electric vehicles. Ford, General Motors and others do not yet sell enough electric cars to recoup the investments they have made to retool assembly lines and manufacture batteries.

Tesla shares have soared since November despite the company’s lackluster financial performance. Investors are focusing instead on promises by Mr. Musk to produce self-driving “cybercabs” that he says could generate trillions of dollars in revenue. The company said on Wednesday that it would “begin launching later this year” in the United States.

“The stock has become untethered from fundamentals,” analysts at Barclays said in a report this month. Rather, they said, investors are betting on “Elon’s star power” and “Tesla’s role as a disrupter — regardless of how distant the opportunity is.”

Some investors also are apparently hoping that Mr. Musk’s close association with President Trump will help Tesla: for example, by helping to clear away regulatory hurdles to self-driving vehicles.

But Mr. Trump and Republicans in Congress have promised to do away with tax credits and other incentives for electric vehicles, including Teslas. Mr. Musk has said that elimination of the incentives would hurt rivals more than Tesla.

The company, which has its corporate headquarters in Austin, Texas, has said it would introduce a vehicle this year that would sell for significantly less than the Model 3 sedan, which starts at $42,500 before government incentives. A more affordable car might attract more buyers and help revive sales. But Tesla has not provided details or displayed a prototype.