Tesla reported Q4 earnings that missed estimates and issued a downbeat full-year production outlook that weighed on the stock, continuing a downtrend for the EV-maker that began at the start of the year.
For the fourth quarter, Tesla reported top-line revenue of $25.17 billion vs. $25.87 billion (est.), however revenue rose approximately 6% from a year ago. From a profitability standpoint, Tesla reported adjusted EPS of $0.71 vs $0.73 (est.) and adjusted net income of $2.486 billion vs $2.61 billion expected by the Street.
In terms of of its full-year production, Tesla said its "vehicle volume growth rate may be notably lower than the growth rate achieved in 2023, as our teams work on the launch of the next-generation vehicle at Gigafactory Texas," indicating it would not reach Street estimates of 2.19 million for 2024, which would have been a 21% increase from 2023.
Tesla's drop in profitability is likely due to downward pressure on margins since Tesla began its cost-cutting efforts late in 2022. Tesla reported Q4 gross margin of 17.6% vs 18.1% estimated, a big drop versus a year ago and a sequential decline from the 17.9% achieved in Q3.
Tesla did mention progress of its gen-2 platform however. "We are focused on bringing the next generation platform to market as quickly as we can, with the plan to start production at Gigafactory Texas. This platform will revolutionize how vehicles are manufactured." Tesla told suppliers it wants to start production of a new mass-market EV codenamed "Redwood" in mid-2025, Reuters reported earlier today, citing four people familiar with the matter.
Headlines like rental car firm Hertz shedding thousands of EVs, Tesla cutting prices in China, a two-week production halt in Berlin, and CEO Elon Musk's ill-timed demand for more stock have also weighed on Tesla. Its shares are down over 15% since the start of year while the S&P 500 is up nearly 2%.
Earlier this month Tesla reported 484,507 deliveries in Q4, beating Street estimates of 483,173, per Bloomberg. That figure represents an all-time record quarter for Tesla, nearly 20,000 units higher than its past record quarter of 466,000 units delivered in Q2 of last year.
For the year, Tesla said vehicle deliveries grew 38% year over year to 1.81 million and production grew 35% year over year to 1.85 million. While its 38% delivery growth rate was below its 50% compound annual growth rate (CAGR) target, Tesla previously said it would not attain that goal due to factory shutdowns and improvements that occurred in Q3.
Also of note are Cybertruck deliveries. Tesla did not breakout this total out in its Q4 delivery update; though the company did say the Cybertruck production ramp would take longer than other models.
A possible wild card on the earnings call with CEO Elon Musk could be his recent comments on his Tesla ownership stake.
Musk warned last week that he would need to secure greater control of Tesla if the company is going to meet its wide-reaching AI ambitions.
"I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control. Enough to be influential, but not so much that I can’t be overturned," Musk said last week from his account on X, the social media platform that the billionaire owns formerly known as Twitter.
"Unless that is the case, I would prefer to build products outside of Tesla." This would likely require a new stock-based compensation plan for Musk, who is already embroiled in a lawsuit over his prior pay package with Tesla investors.
Analysts will be seeking clarification on Musk's comments, given the long-term importance Tesla’s AI initiatives and the appearance that Musk doesn’t have Tesla’s best interests in mind.
"The Street views Tesla correctly (in our view) as a disruptive tech leader, and if Musk ultimately went down the path to create his own company (separate from Tesla) for his next generation AI projects this would clearly be a big negative for the Tesla story," Wedbush analyst Dan Ives wrote in a note to clients last week.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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