Tesla’s Q4 Earnings Report and Future Plans

Electric vehicle manufacturer Tesla (TSLA) recently released its Q4 earnings report, revealing results that missed estimates and a downbeat full-year production outlook. Despite the financial challenges, CEO Elon Musk confirmed that Tesla’s next-generation vehicle is set to launch in the second half of 2025.

For Q4, Tesla reported top-line revenue of $25.17 billion, slightly below the estimated $25.87 billion. While revenue increased by approximately 3% from the previous year, the company faced challenges from an adjusted EPS of $0.71 (versus the estimated $0.73) and adjusted net income of $2.486 billion (compared to the expected $2.61 billion).

Tesla’s full-year production outlook indicated a potential slowdown, with the company suggesting that the vehicle volume growth rate might be notably lower than the rate achieved in 2023. This is attributed to the focus on launching the next-generation vehicle at Gigafactory Texas. The statement indicated that Tesla might fall short of the Street’s estimated production of 2.19 million vehicles for 2024, which would have represented a 21% increase from 2023.

Despite the financial setbacks, Tesla highlighted progress on its next-gen platform, emphasising plans to revolutionise vehicle manufacturing. Musk expressed excitement about the advanced manufacturing system and clarified that the next-gen low-cost vehicle is on track for production in the second half of 2025, aligning with earlier reports of a new mass-market EV codenamed “Redwood.”

The market responded to the earnings report with Tesla shares dropping almost 8% in premarket trading. The decline in profitability is attributed to margin pressure resulting from cost-cutting efforts initiated in late 2022. The Q4 gross margin of 17.6%, lower than the estimated 18.1%, reflects a significant drop from the previous year.

Various factors contributed to Tesla’s recent challenges, including Hertz reducing its EV fleet, price cuts in China, a production halt in Berlin, and Elon Musk’s call for more stock. However, Tesla did achieve a record quarter for deliveries in Q4, with 484,507 units, surpassing Street estimates.

Notably, Musk addressed his recent comments about securing greater control of Tesla for the company to achieve its extensive AI ambitions. Musk expressed concerns about losing influence due to his current shareholding and the potential impact of major shareholder decisions. He emphasised the desire to be an effective steward of powerful technology, rather than seeking additional economic gains.

As Tesla navigates financial pressures and seeks to maintain its innovative trajectory, the electric vehicle industry and financial markets continue to closely monitor the company’s strategic moves and future developments.