Tesla Inc. reported fourth-quarter deliveries of 418,227 vehicles, falling short of analyst estimates and confirming the company's ongoing sales challenges despite investor enthusiasm for autonomous vehicle development. The actual delivery figure came in below both Bloomberg's estimate of 440,907 vehicles and Tesla's own conservative projection of 422,850 vehicles published earlier.

Q4 Results Confirm Delivery Weakness

The reported delivery numbers represent a significant decline from the previous year and underscore the gap between Tesla's autonomous vehicle promises and current sales performance. The company's decision to publish its own conservative estimates proved prescient, as actual deliveries fell below even those reduced expectations.

The delivery shortfall adds to concerns about Tesla's ability to maintain growth momentum in an increasingly competitive electric vehicle market, particularly as the company faces intensifying pressure in key markets like China.

Annual Sales Trajectory Shows Persistent Challenges

Wall Street's outlook for Tesla has grown increasingly pessimistic over the past two years. Analyst estimates for deliveries have plummeted dramatically - from predictions of more than 3 million vehicles two years ago to current projections around 1.80 million vehicles, marking Tesla's second consecutive year of declining vehicle sales.

"Tesla investors are focused on how the company might look five, 10, 15 years down the road, and really discounting what they see in the near term," said Garrett Nelson, an equity analyst at CFRA Research.

Stock Performance Defies Sales Reality

Despite vehicle sales challenges, Tesla's stock demonstrated remarkable resilience throughout the year. After plummeting 45% by early April amid CEO controversies, shares recovered dramatically following Musk's renewed focus on autonomous vehicle development.

The recovery accelerated after Tesla launched an invite-only robotaxi service in Austin using Model Y vehicles with safety operators. Tesla's board subsequently proposed a new compensation package for Musk potentially worth $1 trillion based on milestones including delivering millions of robotaxis.

Competitive Pressures and Market Outlook

Tesla faces intensifying competition, particularly in China's crowded electric vehicle market. Companies including BYD Co. and Xiaomi Corp. now offer similar driver-assistance systems as standard features, undermining Tesla's differentiation strategy. Analysts expect BYD to have sold more battery-electric vehicles worldwide for a fifth consecutive quarter.

Looking ahead, Tesla faces additional headwinds as the US has ceased offering federal tax credits for EV purchases and leases, which Musk warned could lead to "a few rough quarters." However, some analysts see opportunity as major manufacturers pull back from EV investments, with Ford Motor Co. expecting $19.50 billion in charges from abandoned EV projects.

South Korean battery material supplier L&F Co. has revealed a dramatic 99% reduction in its Tesla supply contract, highlighting the challenges facing the electric vehicle manufacturer's Cybertruck program and broader market dynamics.

Massive Contract Reduction Details

The scale of the contract modification represents one of the most significant supplier adjustments in the electric vehicle industry. L&F disclosed the changes in a regulatory filing on Monday.

Cybertruck Production Challenges Impact Supply Chain

According to a person familiar with the situation, the high-nickel cathode material L&F was contracted to supply was specifically intended for Cybertruck batteries. The source, speaking anonymously about private business matters, indicated that Tesla's construction delays and shifting consumer preferences significantly impacted material requirements.

Customer demand patterns showed buyers increasingly choosing Tesla's established models over the Cybertruck:

• Model 3 sedan experiencing continued strong demand
• Model Y sport utility vehicle maintaining popularity
• Cybertruck facing repeated production delays
• Reduced material requirements due to lower-than-expected production volumes

Policy and Market Factors Influence Decision

Beyond production challenges, broader economic and policy considerations contributed to the contract modification. The removal of Inflation Reduction Act subsidies created additional market pressures, according to the source familiar with the matter.

L&F attributed the changes to inevitable market shifts, stating that modifications reflected "shifts in the global market for electric vehicles and the state of the battery supply." The company emphasized that schedules were adjusted to align with current market realities.

Company Response and Market Impact

L&F sought to reassure investors about its broader business operations despite the Tesla contract reduction. The company confirmed that shipments to major Korean cell manufacturers, including LG Energy Solution Ltd., continue proceeding smoothly.

The company stated there have been "no changes to shipments or customer supply of the company's flagship high-nickel product," indicating the Tesla contract represented a specific situation rather than broader operational challenges.

Industry Implications

The dramatic contract reduction illustrates the volatility in electric vehicle supply chains and the challenges suppliers face when major customers experience production difficulties. Tesla did not respond to requests for comment regarding the contract modifications.

The situation demonstrates how production delays and market shifts can cascade through the supply chain, affecting companies across multiple countries and creating significant financial impacts for suppliers who had planned operations around large-scale contracts.