Why Tesla Stock Dropped to Start the New Year

The stock of Tesla (NASDAQ: TSLA) had a monster run to end 2024. It's starting 2025 on a down note, though, and not just due to profit-taking. Tesla released its fourth-quarter and full-year electric vehicle (EV) delivery data today, and investors weren't impressed.

For the first time ever, the company realized a year-over-year decrease in the volume of EVs it shipped to customers. Shares declined by as much as 7.5% Thursday morning as a result. As of 11:15 a.m. ET today, the stock was still trading lower by 5.8%. That helped pause the late 2024 rally that led to a return of more than 62% last year.

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Beyond Tesla's EVs

Management reported 495,570 EV deliveries in the fourth quarter. Although that was a quarterly record, it missed expectations for about 505,000 shipments. It also meant that Tesla delivered slightly fewer vehicles in 2024 versus 2023. Full-year deliveries were about 1.79 million, compared to 1.81 million in the prior year.

But investors need to look beyond its EVs to make sense of the stock's valuation. Tesla's energy segment is one area to keep an eye on. After experiencing 125% growth in energy deployments in 2023, the company's 31.4 gigawatt hours (GWh) of energy storage deployed in 2024 represented another 114% increase year over year. Energy storage demand has increased as renewable energy production has grown.

But many investors are waiting for the company to roll out a truly autonomous vehicle that doesn't require human intervention. Elon Musk has touted Tesla's self-driving technology to enable a fleet of robotaxis that would provide a potentially large new income stream for the company. Its robotics division could also be a future income contributor.

For now, though, income and profits are coming from EV sales. With a slight decline for the first time year over year, some investors are selling shares today after a huge return in 2024. Long-term investors should continue to watch how Tesla's technology continues to evolve and decide if that potential is worth holding on to shares.

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Howard Smith has positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.