Tesla’s Stock Correcting, More Than 20% Down From Recent Highs

Tesla's stock (NASDAQ: TSLA) dropped by 6% to begin 2025 on a sour note, bringing the cumulative 5 day decline to 18.44% after the automaker announced a decline in vehicle deliveries for the year 2024. The company delivered 1.79 million vehicles throughout the year, a 1.1% decrease compared to its 2023 delivery figures.

Zooming out onto the 6 month chart and the bullish momentum building post November's election results is clear to see, but fundamentals can shift the mood in the short term, even if the bigger picture bull narrative remains in tact.

In the fourth quarter of 2024, Tesla failed to meet its delivery targets, achieving 495,570 deliveries against a Wall Street forecast of 503,269 units. Among the vehicles delivered, 23,640 were part of the Cybertruck lineup out of a total of 971,122 vehicles delivered in the final quarter, with Model 3 and Model Y contributing to 471,930 of these deliveries.

On the production front, Tesla produced 459,445 vehicles in the fourth quarter of 2024, indicating a challenge in aligning production with its ambitious delivery targets.

Several factors are contributing to Tesla's current market challenges. Important among these are reduced electric vehicle (EV) subsidies in Europe, increasing competition from other automotive sectors like the hybrid vehicle market in the United States, and heightened competition from Chinese EV manufacturer BYD.

Moreover, efforts to stimulate demand through price reductions and the launch of the Cybertruck have yet to yield the desired success. Compounding these challenges, Tesla has observed a continuing decline in its vehicle sales in Europe.

Many analysts point to Tesla's price target being far more about the future than the present, and the vehicle narrative is largely taking a back seat when composing notes. A 20% correction from the recent highs of $488.54 could even be seen as a healthy move in the larger Tesla story, which has plenty of potential catalysts in the year ahead.

Morgan Stanley and Stifel released notes with unchanged price targets on the news, whilst Truist trimmed from $360 to $351, with pricing reductions mentioned as a factor seen as required in stimulating demand. The gulf between bulls and bears on Tesla is great indeed, with the high target of $528 set against a low of $120.

Delivery declines reflect a challenging period for Tesla, as the automaker navigates a shifting automotive landscape impacted by policy changes and competitive pressures. Whilst bears will point to this as being significant, for many bulls however, this changes nothing in the bigger picture.