Tesla Reports Q4 Earnings Miss, Outlook Impacted by Costs and New Vehicle Plans
Revenue and Earnings Fall Short
Tesla (TSLA) announced its fourth quarter earnings after market close on Wednesday, falling short of analyst estimates. Revenue reached $25.71 billion against an expected $27.21 billion, representing a modest 2% increase year-over-year. Adjusted earnings per share (EPS) stood at $0.73, missing the anticipated $0.75.
Profitability Headwinds
Operating income amounted to $1.58 billion, well below the projected $2.68 billion. Tesla attributed this decline to increased costs associated with artificial intelligence (AI) and other research and development (R&D) initiatives, as well as lower average selling prices for its vehicles. The company also noted that plans for new vehicle production will result in lower cost reductions than previously expected.
Upcoming Model Changes Impact Margins
Tesla's Chief Financial Officer (CFO), Vaibhav Taneja, announced a temporary shutdown of Model Y production across all factories to facilitate the introduction of a new Model Y variant. The shutdown is expected to negatively impact margins.
Full-Year Performance
For the full year, Tesla reported revenue of $77.07 billion and adjusted net income of $8.41 billion, marking a 23% decline year-over-year. The company delivered 1.78 million vehicles in 2024, falling short of analyst estimates for 1.8 million and resulting in an annual total below 2023's 1.8 million deliveries.
FSD and New Product Timeline
During the earnings call, CEO Elon Musk announced the upcoming launch of unsupervised paid FSD (full self-driving) in Austin, Texas, scheduled for June 2025. FSD is also planned for deployment in Europe and China in 2025. Tesla reiterated its plans to start production of new vehicles, including "more affordable models," in early 2025.
Cybercab and Vehicle Volume
The company's purpose-built robotaxi, the Cybercab, is still on track for volume production in 2026. Fleet testing of existing models is expected later this year. Tesla anticipates vehicle volume growth in 2025 due to advancements in vehicle autonomy and new product launches.
Energy Storage Business Remains Strong
Tesla's energy storage business continues to perform well, with energy deployments expected to increase by 50% year-over-year.
Market Reaction and Analysts' Views
Tesla stock experienced volatility in extended trading following the earnings announcement but remained higher than pre-earnings levels. Analysts remain divided in their outlook for Tesla. Wedbush estimates the AI and autonomous opportunity alone is worth at least $1 trillion for Tesla and expects the Trump White House to accelerate these initiatives. However, Guggenheim Securities believes regulatory obstacles could hinder the company's progress in robotaxis and self-driving vehicles.