Tesla shares took a hit today after the company reported lower-than-expected delivery numbers. The electric vehicle maker reported 495,570 deliveries versus expectations of 506,673. Even though the company missed by just over 2%, record deliveries from Chinese automakers make the performance appear much worse than it actually is.

Chinese electric vehicle companies such as NIO, XPeng and Li Auto reported record delivery numbers for December. Their numbers increased across the board by 15 to 30%. Although some automakers missed their annual targets, almost every company benefited from an increase in deliveries towards the end of the year. For Tesla, this means increasing competition in the country, which is nothing new for the US automaker. The company continues to battle in the Chinese market against local companies that are heavily subsidized by the Chinese government.

Investors would be happy to see the stock now respond to business fundamentals rather than politics. This will help with price discovery, although the recent rally means the stock is still quite high despite today’s decline. At the same time, anyone willing to bet against Tesla will be wary of what influence Elon Musk will have on the government once Donald Trump takes the oath.

Looking ahead to the coming year, it is expected that Tesla will reduce prices primarily for its Model Y and Model 3, primarily due to improvements in battery technology. We can also expect significant autonomy development if Musk can force regulators to reconsider their stance, particularly in the context of the AI ​​threat from China. We’ve previously reported on how China’s advances in road autonomy threaten U.S. dominance. If this comes to pass, Tesla can say goodbye to its China business, which has been the company’s growth engine in recent years.

Tesla’s future will be determined by its lead in autonomy, not delivery numbers, according to Dan Ives, an analyst at Wedbush Securities. He believes delivery numbers are only 15% of the issue right now, the rest is autonomy. AI will continue to be a focus for US companies in 2025 and it will be no different for Tesla. We are optimistic about Tesla’s ability to achieve a lead in autonomy if regulators ease current restrictions.

Tesla ranks 23rd on our current list of the 31 most popular stocks among hedge funds. According to our database, 99 hedge fund portfolios held TSLA at the end of the third quarter, up from 85 the previous quarter. While we recognize TSLA’s potential as a leading investment, we believe some AI stocks are more promising for higher returns , within a shorter time frame. If you’re looking for an AI stock that has the same promise as TSLA but trades at less than 5 times earnings, check out our report on it cheapest AI stock.

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