Tesla Eyes Growth Resurgence in 2025 Despite Q4 Revenue Disappointment

Electric vehicle leader Tesla (TSLA) has set its sights on a return to growth in 2025, after disappointing fourth quarter results capped off a challenging year marked by modest revenue growth and declining profits.

Unsupervised FSD Expansion

CEO Elon Musk revealed plans to deploy Tesla's paid, unsupervised Full Self-Driving (FSD) system to Austin, Texas, in June. Analysts anticipate a wider rollout across the US by the end of 2025 and globally by 2026, fueling bullish sentiment.

Financial Headwinds

Despite revenue rising 2% year-over-year to $25.7 billion for Q4, Tesla fell short of analyst estimates of $27.2 billion. Full-year 2024 revenue grew 1% to $97.7 billion, while adjusted earnings per share came in at $0.73, below Wall Street expectations of $0.75.

Operating income declined 23% to $1.58 billion, attributed to AI-related costs and lower average selling prices. However, adjusted net income increased 3% to $2.6 billion.

Production and Deliveries

Tesla's auto revenues declined 8% in Q4 compared to 2023 and 6% for 2024 versus 2023. Total auto production fell 7% in Q4, while deliveries rose 2%. The company missed expectations with 495,930 vehicles delivered in 2024, falling short of estimates around 510,400.

Capital Spending and New Models

Tesla anticipates capital spending to exceed $11 billion in 2026 and the following two fiscal years. Plans for new vehicles and production will result in reduced cost reduction, but the company expects efficient growth through utilizing both current and next-gen platforms.

The company reiterates plans for production of more affordable models and its purpose-built robotaxi, the Cybercab, in 2026.

Vehicle Volume Growth

Tesla expects vehicle volume to return to growth this year, driven by advancements in vehicle autonomy and product introductions. FSD is planned for launch in Europe and China in 2025.

Energy Storage

Tesla's energy storage business remains a bright spot, with deployments expected to grow 50% year-over-year.