Tesla’s latest earnings report for Q4 2024 didn’t quite hit the mark, missing expectations as the company grappled with slower sales and shrinking profit margins. This marks a rare stumble for the electric vehicle leader, which has been a standout in the automotive industry for years.

Shares of Tesla initially dipped around 6% after the report dropped but managed to claw back some ground later. The company’s $25.7 billion revenue was about $1.5 billion shy of predictions, and while its net income of $2.5 billion was slightly up from last year, it still fell short of forecasts. The bigger worry? Profit margins, excluding regulatory credits, tightened to 13.6%, well below the 16.2% analysts were hoping for.

The slump comes as Tesla faces growing competition from other automakers stepping up their EV game in key markets like the U.S., China, and Europe. This rivalry has pushed Tesla to slash prices, cutting into its bottom line. Even though the company had already warned about its first-ever annual sales drop in 2024, the quarterly numbers still stung.

On a brighter note, Tesla assured investors that plans for more affordable models are on track, with production expected to kick off in early 2025. The company also teased its Cybercab driverless robotaxi, set for 2026. But Tesla has a history of missing production deadlines, so there’s a bit of skepticism around these promises.

Looking ahead, Tesla didn’t set specific sales targets for 2025 but hinted that growth will depend on factors like its autonomy efforts, factory production, and the broader economy. Meanwhile, CEO Elon Musk’s high-profile involvement in politics—both in the U.S. and abroad—has raised eyebrows. His support for polarizing figures could risk alienating some EV buyers, particularly those who lean more liberal.

Adding to the uncertainty, U.S. regulatory changes could shake up Tesla’s future. The potential elimination of a $7,500 EV tax credit under the Trump administration might reduce competition but could also hurt Tesla’s revenue from regulatory credits. It’s a mixed bag for a company facing its fair share of challenges as the EV market heats up.