On Thursday, Tesla announced its first-ever annual decline in sales since becoming a public company, as heightened competition and decreasing demand for electric vehicles impacted its performance.

The firm announced fourth-quarter sales of 495,570 vehicles, an increase of 2% compared to the previous year. However, that placed it significantly below the 595,413 pure EVs sold by its Chinese competitor BYD during the quarter. Tesla’s total sales for the year reached 1.8 million vehicles, surpassing BYD’s annual EV figure by 24,000, allowing it to maintain its status as the largest EV manufacturer globally.

However, Tesla’s overall sales for 2024 decreased by 1% compared to the total for 2023, marking the first instance of the company reporting such a decline. At one point, Tesla reported an annual sales growth of almost 50%, and its 2023 sales figures increased by a strong 37% compared to 2022, making even a slight decline indicative of a major slowdown.

Tesla has experienced heightened competition not only from Chinese competitors like BYD but also from established global manufacturers such as General Motors, Ford, Volkswagen AG, and its Korean partners Hyundai and Kia. Although those traditional car manufacturers have merely a small portion of Tesla’s EV sales, as they primarily offer conventional gasoline vehicles, they are becoming more competitive.

Tesla has addressed the decreasing demand by reducing vehicle prices in both China and the United States. It holds the benefit of being more lucrative than its traditional auto manufacturer competitors, who continue to incur losses on their EV sales while attempting to increase sales volume and lower expenses.

Sales of electric vehicles, in general, are still increasing, both in the U.S. and worldwide, although at a more gradual rate than before.

Tesla (TSLA) shares dropped over 4% in early trading due to the disappointing sales report. However, they concluded 2024 with a 68% increase for the year. Nearly all of that increase occurred after Election Day, as investors speculated that Tesla would gain from the policies of the forthcoming Trump administration, especially due to the strong backing for the president-elect from CEO Elon Musk.