Tesla Experiences First Annual Sales Decline, Yet the EV Market Continues to Thrive

Just a few days into 2025, the electric vehicle market is already experiencing a wild ride. Last week, Tesla set the tone for this tumultuous year by announcing that, for the first time, the leading American EV manufacturer delivered fewer cars globally than the previous year. In 2024, Tesla delivered 1.789 million vehicles, marking a 1.1 percent decline from the 1.808 million delivered in 2023. As a result, Tesla's stock plummeted by 8 percent.
However, on Friday, more annual sales figures emerged, bringing a brighter outlook for the EV sector. General Motors reported a 50 percent increase in electric vehicle sales compared to last year, with its Chevrolet Equinox EV SUV leading the way. Honda's Prologue EV, which launched midway through the year, sold 33,000 units—an impressive feat for the Japanese automaker's debut in the US electric market. Even Ford, which announced last year that it would pivot away from its all-electric sales strategy in favor of a mix of EVs, hybrids, and gasoline vehicles, managed to sell over 50,000 Mustang Mach-Es.

Global EV sales numbers likely won’t be fully collated till next month, but analysts say that in the US, electric vehicles seem to be on track for a pretty reasonable 8 percent of all car sales in 2024.

Perhaps calling it a "roller coaster" is a bit of an exaggeration. In many respects, the narrative around EV sales—and even the Tesla angle—is unfolding largely as the industry anticipated. "At the beginning of the decade, people expected this explosive hockey-stick growth for EVs," says Stephanie Brinley, a principal automotive analyst at S&P Global Mobility. "That expectation was unrealistic. The way the market is actually developing is much more in line with reality."

“Everyone is continuing to move forward slowly,” says Corey Cantor, a senior associate who covers electric vehicles at BloombergNEF, of electric cars and their manufacturers.

Tepid Optimism

No one ever claimed that the shift to electric vehicles would be a walk in the park. According to Ivan Drury, director of insights at Edmunds, an automotive website, electrification represents one of the most significant transformations the auto industry has ever experienced—and such a transformation doesn’t happen overnight.

Creating an entirely new powertrain and securing the necessary battery minerals is just part of the equation. The other part involves altering consumer buying habits, particularly for what is likely one of the most significant purchases they will ever make. Considering these challenges, Drury notes, “it’s impressive to see how much progress has been made.”

Even Tesla's recent setbacks could be interpreted as a sign that CEO Elon Musk's company is on the right track. Back in 2006, Musk unveiled his "Master Plan," which outlined Tesla's "overarching purpose": "to help accelerate the transition from a mine-and-burn hydrocarbon economy to a solar electric economy, which I believe is the primary, though not the only, sustainable solution." The challenges Tesla faces in maintaining annual growth are partly due to the success of this strategy, leading to increased global competition in the electric vehicle market. Last year, Tesla officially lost its crown as the world's leading EV manufacturer to China's BYD, which produced around 4,500 more electric vehicles. (However, Tesla still sold more EVs overall, thanks in large part to Chinese consumers, who purchased 8.8 percent more of Tesla's vehicles last year compared to 2023.)

The future of the global vehicle electrification initiative largely hinges on policy decisions. In the US, electric vehicle (EV) sales surged in the last quarter of the year. This spike may be attributed to consumers reacting to news about the new Trump administration's plans to eliminate electric vehicle incentives, prompting them to heed experts' advice and purchase new cars while subsidies were still available. What will the landscape look like in 2025 if those purchase incentives are removed?

Although more sales data is expected, the figures for 2024 suggest that the industry is progressing as anticipated. “It’s a wild transition,” remarks Brinley, the analyst, regarding the shift to electric vehicles. However, she remains optimistic: “We are going to see greater adoption,” she asserts.

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