Tesla (TSLA -1.11%) was the world's largest electric vehicle (EV) company by sales until the fourth quarter of last year when China-based BYD outsold it for the first time. Tesla once had the EV market almost entirely to itself, but now, it's grappling with a tsunami of competition from EV start-ups and legacy automakers entering the space.
At the same time, demand from consumers appears to be fading. EVs typically come with a premium price tag, and high interest rates are forcing more consumers to opt for cheaper gas-powered vehicles. Tesla slashed prices by an average of 25% in 2023 to help spur demand, which dented the company's profitability.
Tesla stock is down 21% year to date, and most of that decline happened after it reported its official results for full-year 2023. Tesla delivered a record 1.8 million vehicles for the year, but it was an increase of just 38% year over year, which marked the slowest pace of growth since 2020.
Tesla didn't offer a deliveries forecast for 2024, but analysts' estimates point to 2.2 million vehicles, which would mark a further slowdown in growth to just 22%.
Tesla's plan to reignite growth
Tesla plans to start production of a cheaper EV model in 2025, which could be priced at $25,000. It might pull in more consumers who want a Tesla but can't afford the other models in its lineup.
But Tesla isn't just a car manufacturer. It continues to develop industry-leading self-driving software which could transform its business, and it also plans to launch a humanoid robot by 2027 called Optimus. Not to mention, Tesla already has fast-growing solar energy and battery storage businesses.
It's unlikely any of the above will send Tesla stock skyward in the near term, but the 21% decline this year -- and the broader 52% drop from its all-time high -- could serve as a great entry point for investors willing to hold for the stock long term.
