Tesla's sales dropped for the first time in more than 10 years, delivering nearly 1.79 million cars in 2024—a slight 1% decline from 2023's 1.8 million. Despite repeated price cuts aimed at attracting buyers and retaining its status as the global leader in electric vehicles (EVs), the company faced slowing demand and mounting competition.

China's BYD is closing in, reporting 1.76 million EV sales in 2024. BYD’s total vehicle sales, including hybrids, surged over 41% to more than 4.2 million, driven by strong domestic demand. Benefiting from government subsidies and fierce market competition in China, BYD has expanded its dominance over foreign brands like Volkswagen and Toyota.

Tesla, which also relies heavily on the Chinese market, has struggled to maintain its position amid an ongoing price war. Sluggish demand for EVs in other regions, including the US and Europe, further compounded challenges for carmakers like Volkswagen, Ford, and General Motors, many of whom scaled back EV targets or delayed investments.

Tesla CEO Elon Musk attributed weaker sales to rising borrowing costs since 2022, making car purchases more expensive. Analysts also cited intensified competition and concerns about Tesla's brand image, as Musk’s polarizing political activities garnered attention.

While Tesla's sales recovered in the latter half of the year, hitting a quarterly record of 495,000 deliveries in Q4, the figure fell short of analyst expectations of 500,000. This underperformance led to a 5% dip in Tesla's share price, even as the stock rose over 60% throughout the year.

Elsewhere, the auto industry faced major shakeups. Japanese automakers Honda and Nissan entered merger talks to counter China’s rapid EV growth. Stellantis CEO Carlos Tavares resigned abruptly after a profit warning, highlighting challenges for the company, which owns brands like Jeep, Peugeot, and Chrysler.

Governments have stepped in to support domestic manufacturers, with the European Union imposing tariffs of up to 45.3% on Chinese EV imports and the US implementing 100% duties on Chinese EVs. Meanwhile, BYD expanded its presence in emerging markets but encountered setbacks, including a factory construction halt in Brazil over labor violations.

As the EV industry evolves, Tesla faces a critical juncture to navigate competition, consumer demand, and global market dynamics.