Tesla Inc.'s (NASDAQ:TSLA) streak of year-over-year delivery growth came to an end in 2024, with the EV giant delivering 1.79 million vehicles, a 1% decline compared to 2023.

This marks the first delivery contraction since Tesla's inception and has left investors questioning the company's ability to maintain its ambitious growth targets in the coming years.

Following the miss, Tesla shares tumbled 6% on Thursday, reflecting the market's disappointment.

Fourth Quarter Deliveries Fall Short of Expectations

In the fourth quarter of 2024, Tesla delivered approximately 496,000 vehicles. While this represented a 7% sequential increase and a 2% rise year-over-year, it still missed Wall Street consensus estimates, which ranged from 500,000 to 510,000. Production numbers were also underwhelming, with 459,000 vehicles produced in the fourth quarter, marking a 2% decline quarter-over-quarter and a 7% drop year-over-year.

Goldman Sachs analyst Mark Delaney said, "We believe weakness in Europe (down double digits year-over-year in Q4) was offset by growth in China (mid to high teens growth year-over-year in Q4), and that U.S. deliveries were down modestly year-over-year, with growth from Cybertruck offset by declines in other models."

Goldman's Lowered 2025 Delivery Estimates

Goldman Sachs now expects Tesla to deliver 2.01 million vehicles in 2025, down from its prior estimate of 2.03 million. This still implies a 12% year-over-year growth, but it falls short of Tesla's own target of 20%-30% annual growth.

Delaney highlighted the importance of Tesla's upcoming models in achieving higher growth.

"We believe that the degree to which the features and costs of new model(s) are differentiated enough versus what Tesla currently provides, and when Tesla launches new models, will be key variables in determining how fast Tesla grows," he said.

For 2026, Goldman Sachs maintains its delivery forecast of 2.3 million units, offsetting slightly lower expectations for premium models (S/X/Cybertruck) with higher growth assumptions for Tesla's more affordable models.

Goldman Sachs also lowered its 2024 earnings-per-share estimate from $2.01 to $2 and its 2025 EPS estimate from $2.85 to $2.80.

Full Self-Driving Progress and Robotaxi Potential

Tesla continues to make strides in its Full Self-Driving software, with version 13 rolled out to customers in late 2024.

Crowdsourced data from Tesla's FSDtracker indicates that miles to critical intervention have improved to 260-400 miles under v13, compared to 200-300 miles under the prior version.

While Tesla appears to lead in autonomous vehicle technology, the road to achieving a level of safety superior to human drivers remains challenging.

Goldman Sachs indicates Tesla is unlikely to reach this goal by the second quarter of 2025 but suggests that the company could launch a limited robotaxi service in the next 12-24 months using remote assistance.

Despite the short-term headwinds, Goldman Sachs reiterated its 12-month price target of $345 for Tesla stock, holding a Neutral rating. The firm highlighted fundamental challenges to the core auto business but recognized the potential for stronger long-term growth driven by software and services.

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Photo: Courtesy Tesla