Tesla has posted a slump in profits after the first sales decline in its history as Elon Musk’s car company faces growing Chinese competition and flatlining interest in electric vehicles (EVs).

The world’s most valuable car company posted a 20.4pc fall in operating profits for 2024 as it cut prices and offered deals in an attempt to entice customers. It was the second consecutive fall in annual operating profits.

Tesla shares have soared since Donald Trump’s election victory. Mr Musk, who has been a prominent support of Mr Trump and become a regular presence by his side , has seen his wealth skyrocket to $428bn (£344bn).

However, the company has faced questions about whether its stunning growth in recent years can continue as more carmakers launch electric models and low-cost Chinese rivals become increasingly popular.

The company recorded its first ever annual decline in volume sales last year, and was overtaken by BYD, China’s biggest EV maker, in the final months of 2024. It sold 1.79m cars, a slight drop on the previous year’s 1.8m after over a decade of strong growth.

On Wednesday night, it said revenues in the fourth quarter of last year had climbed by 2pc to $25.7bn. Quarterly profits fell to $2.3bn, down 71pc on the same period a year ago when the company received a one-off tax benefit.

Operating profits, which ignore such one-off adjustments, were down 23.3pc in the quarter to $1.6bn, and 20.4pc for the year overall. Shares dropped slightly in after-hours trading.

Analysts have suggested that Mr Musk’s support of Mr Trump has put Tesla’s traditionally Left wing and environmentally conscious consumers off its cars.

Meanwhile, Mr Musk has spent much of the last few months ensconced in Mar-a-Lago in preparation for a role running Mr Trump’s Department of Government Efficiency.

Tesla’s chief executive has predicted a blistering return to growth this year, saying that sales could increase by as much as 30pc as it releases a cheaper vehicle and increases production of its unconventional Cybertruck.

It made a more muted prediction on Wednesday night, saying “we expect the vehicle business to return to growth in 2025”.

The company said it continued to drive the cost of making its cars down, with the average cost of producing a vehicle down to $35,000.

Tesla is developing a fully autonomous “robotaxi” which it says it will release in 2026. Mr Musk is staking the company’s future on self-driving technology as electric cars become increasingly commoditised, as well as artificial intelligence-powered products such as its Optimus humanoid robot.

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