Tesla on Wednesday reported a sharp drop in profit for 2024 as rivals in China, Europe and the United States chipped away at its lead in the market for electric vehicles.

The company, which is led by Elon Musk, said it made a profit of $2.3 billion during the last three months of 2024. That was a decline compared with $7.9 billion a year earlier, but 2023’s profit included a one-time tax benefit of $5.9 billion. Tesla’s operating profit, which excludes that special gain, fell 23% in the final three months of the year.

Sales rose 2% to $25.7 billion in the fourth quarter, from $25.2 billion in the same period in 2023.

The company’s revenue and profit were helped by $692 million in sales of regulatory credits to other automakers that need them to meet emissions standards. A year earlier, the company generated $433 million from such sales. The Trump administration and Republicans in Congress have said they intend to repeal the regulations that allow Tesla to sell such credits.

For the full year, profit was $7.1 billion, Tesla said, down from $15 billion a year earlier. Sales rose to $97.7 billion, from $96.8 billion in 2023.

Tesla also sells batteries used by electric utilities, businesses and homes to store energy from solar panels and other sources. Increased sales of those products helped compensate for lackluster car sales.

The company remains reliant on two models, the Model 3 sedan and Model Y SUV, for most of its car sales, while rivals in Asia, Europe and the United States offer a wider and growing selection of EVs.

BYD, based in China, sells more than a dozen electric and plug-in hybrid models, from subcompacts to minivans, and has emerged as Tesla’s biggest challenger outside the United States. Chinese automakers are expected to introduce more than 60 models in the second quarter of this year alone, analysts at HSBC said in a report.

In its earnings report, Tesla said a new, more advanced version of the Model Y would go on sale in March, with a starting price of around $60,000. The current Model Y starts at around $45,000. It also said “more affordable” models would go into production in the first half of the year, but provided no details.

Tesla said a self-driving vehicle that can serve as a driverless taxi, called the Cybercab, would go into production in 2026.

Increased competition and Tesla’s relative lack of new models led to a decline of the company’s market share in China, Europe and the United States last year. Tesla said earlier this month that it sold 1.8 million vehicles worldwide in 2024, slightly less than in 2023. That is a big change for a company that increased car sales 38% in 2023 and 40% in 2022.

In the United States, Tesla’s share of the EV market fell to 44% in the final quarter of the year, from 51% a year earlier, according to Cox Automotive. Tesla has also lost ground in the luxury market. In the United States, BMW sold nearly as many i5 and i7 luxury sedans as Tesla sold Model S cars in 2024; and Rivian sold about 7,000 more of its R1S SUVs as Tesla’s Model X, according to Cox.

Sales of Tesla’s newest vehicle, the Cybertruck pickup, which starts at around $80,000, also seem to be flagging. Tesla sold 13,000 Cybertrucks in the fourth quarter, down from 16,700 in the third quarter, according to estimates by Cox.