Tesla’s latest earnings report fell short of expectations, but the company is pledging a return to growth in 2025, reassuring investors and boosting its stock price.
Tesla misses revenue expectations
For the fourth quarter of 2024, Tesla reported $25.7 billion in revenue, falling short of analysts’ predictions of $27.2 billion. The company’s annual revenue grew just 1% to $97.7 billion, marking a slowdown in its expansion. Adjusted earnings per share were reported at $0.73, slightly below the expected $0.75.
Operating income came in at $1.58 billion, down 23% from the previous year, while adjusted net income rose 3% to $2.6 billion. Tesla attributed the decline in profitability to increasing costs in artificial intelligence and research and development, as well as lower average selling prices.
Production challenges and shifting strategies
Tesla’s auto revenue saw an 8% drop in Q4 and a 6% decline for the full year compared to 2023. The company produced 7% fewer vehicles in the fourth quarter, with deliveries rising just 2%. In 2024, Tesla delivered 1.78 million vehicles—a 1% decline, the first year-over-year drop in company history.
Tesla CFO Vaibhav Taneja announced that production of the Model Y will be temporarily halted at factories as the company transitions to a refreshed version. The move is expected to impact profit margins in the short term.
New models and autonomous driving expansion
Despite the setbacks, Tesla remains focused on the future. The company reiterated plans to launch new, more affordable models in early 2025, alongside the upcoming Cybercab, a fully autonomous robotaxi set for production in 2026.
CEO Elon Musk also revealed that Tesla is set to introduce paid, unsupervised Full Self-Driving (FSD) in Austin, Texas, by June. The company aims to roll out FSD technology in Europe and China by 2025.
Energy business remains strong
While Tesla’s vehicle division faces headwinds, its energy storage business continues to thrive, with deployments expected to grow by 50% year over year. This sector remains a bright spot, contributing to the company’s long-term strategy.
Tesla’s role in U.S. industrial policy
Musk’s increasing influence in the Trump administration has played a role in Tesla’s market trajectory. During Wednesday’s earnings call, he emphasized the importance of reviving American manufacturing, stating, “We need to make manufacturing cool again in America.”
Tesla shares initially surged on Trump’s election win but have since dipped about 3% year-to-date. However, with the company’s renewed focus on autonomy and product expansion, investors remain optimistic about its long-term prospects.
