Tesla Pledges Growth Return in 2025, Stock Rises in Extended Trading
Tesla (TSLA) stock surged 4% during Wednesday's extended trading session following the company's announcement of a planned return to growth in 2025. This growth projection comes after disappointing fourth-quarter results that capped a year of modest revenue growth and a decline in profits.
Fourth Quarter Results Fall Short
Tesla reported fourth-quarter revenue of $25.7 billion, missing analyst estimates of $27.2 billion and showing a mere 2% increase year-over-year. Adjusted earnings per share came in at $0.73, below the $0.75 anticipated by Wall Street. Operating income declined by 23% to $1.58 billion, and adjusted net income increased by 3% to $2.6 billion.
The company attributed the lower operating income to AI-related costs, R&D expenses, and reduced average selling prices for existing vehicles.
Projected Auto Business Growth
In a shareholder presentation, Tesla expressed confidence in its auto business returning to growth in 2025. This projection follows an 8% decline in total auto revenues during the fourth quarter and a 6% drop throughout 2024. Tesla also reported a 7% decrease in auto production and a 2% increase in deliveries in the fourth quarter.
New Vehicle Plans and Production
Despite plans for new vehicles, Tesla anticipates "less cost reduction" than initially projected. However, the company stated that utilizing current and next-generation platforms on the same manufacturing lines will enable efficient vehicle volume growth during uncertain economic conditions.
Tesla's CFO, Vaibhav Taneja, announced a temporary shutdown of Model Y production to facilitate model changeover, which will impact margins. The company emphasized that plans for new vehicles, including "more affordable models," remain on schedule to begin production in early 2025.
Robotaxi and Energy Storage
Tesla's Cybercab, a purpose-built robotaxi, is still expected for volume production in 2026, with fleet-testing of current models to commence later this year. The company also highlighted its energy storage business as a growth area, forecasting a 50% increase in energy deployments year-over-year.
Musk's Role and FSD Launch
On the earnings call, CEO Elon Musk revealed that paid, unsupervised FSD (full self-driving) will be available in Austin, Texas, in June. Tesla is currently testing the technology at Giga Austin and plans to launch FSD in Europe and China in 2025.
Year-to-Date Stock Performance
Year-to-date, Tesla stock has experienced a modest decline of approximately 3%. However, during Wednesday's extended trading session, it witnessed a significant jump in value following the company's growth announcements.