Tesla TSLA shares fell 6% as deliveries came in below guidance and fell year on year in 2024. We think the company is still on track to see deliveries growth in 2025.
Why it matters: Tesla deliveries fell in 2024, the first annual decline in company history.
- Lower deliveries reduce Tesla’s growth and the total addressable market for the company’s ancillary services, including autonomous driving software, charging, and insurance. The slight decline highlights that the current vehicle lineup is nearing market saturation.
The bottom line: We view the deliveries number as negative for Tesla. However, we’re maintaining our fair value estimate of $210 per share and narrow moat rating. We view shares as overvalued, with the stock trading more than 80% above our fair value estimate, in 1-star territory.
- We’re reducing our near-term deliveries outlook in the automotive segment. Separately, following record energy storage deployments, we’re raising our forecast for energy storage growth. The two changes roughly offset each other, leading to no fair value estimate change.
Coming up: In 2025, management hopes to grow deliveries through a new lower-priced vehicle set to enter production by midyear. Tesla also plans to launch its level 3 autonomous driving software in California and Texas, a key step toward the company’s goal of a robotaxi service.
- Management guided for deliveries growth of 20%-30% in 2025, but we see growth well below this range, as we expect production of the new vehicle will take longer to ramp up versus the implied current timeline.
- We expect the level 3 software to launch in 2025, but it will likely require further improvements before robotaxis can be feasible. We forecast the robotaxi launch will be delayed past management’s 2026 timeline.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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