Tesla Earnings: Elon Musk, Profits & AI Focus

Tesla Earnings Report: A Key Update

The time for Tesla’s earnings announcement has arrived – a crucial quarterly review of one of the world’s leading electric vehicle manufacturers and its prominent CEO, Elon Musk.

Release Schedule and Expectations

Tesla’s financial results for the fourth quarter and the entirety of 2024 are anticipated to be published on Wednesday following the close of the stock market. A live webcast featuring Tesla’s leadership team responding to inquiries from both financial analysts and individual investors is slated to commence at 5:30 p.m. Eastern Time.

A History of Surprises

Since Tesla’s initial public offering in June 2010, its quarterly reports and subsequent earnings conferences have consistently generated noteworthy developments, frequently originating from statements made by Musk himself. This particular earnings release, occurring amidst Musk’s involvement with the current administration, is expected to be particularly significant.

Key Financial Metrics to Watch

Revenue and net income figures are primary areas of focus, alongside any forward-looking guidance provided for the year 2025. Earlier this month, Tesla reported global vehicle deliveries totaling 1.77 million units in 2024.

This represents a 2.2% decrease compared to the 1.81 million vehicles delivered in 2023. Notably, this marks the first instance of a year-over-year decline in deliveries, potentially leading to reduced revenue unless other segments of Tesla’s business can compensate for the shortfall.

Positive Trends in Q4

However, Tesla’s fourth-quarter delivery numbers indicated a potential upswing as 2025 approaches. The company successfully delivered 495,570 vehicles during the final quarter, a 7% increase from the third quarter and approximately 2.28% higher than the same period in the previous year.

Looking Ahead to 2025

Attention will be directed towards the financial statements, and analysts will be keenly listening for Musk’s projections regarding sales and profitability for 2025.

Additional Areas of Interest

Further points of interest include any commentary from Musk concerning the executive order issued by the President to temporarily halt the allocation of funds from programs established by the Inflation Reduction Act and the Bipartisan Infrastructure Law, specifically those earmarked for EV charging stations.

Updates on Key Projects

We will also be monitoring for any updates regarding the much-anticipated Tesla Roadster, the advancement of the Tesla Semi program, and the performance of the Supercharger network in accommodating vehicles from manufacturers other than Tesla.

• Vehicle Deliveries: A key indicator of overall demand.
• Financial Performance: Revenue and net income will be closely analyzed.
• Future Guidance: Expectations for sales and profits in 2025.

The Pursuit of Robotaxis at Tesla

A key focus will be Elon Musk’s ongoing discussion regarding the long-anticipated, yet unrealized, goal of full autonomy for Tesla vehicles. This promise has significantly influenced the company’s valuation and motivated substantial internal changes, including workforce reductions exceeding 10% globally last year as Musk prioritized autonomous driving development.

Prior to the earnings call, Tesla shared a video on X, Musk’s social media platform, demonstrating vehicles autonomously navigating approximately one mile to a delivery preparation area. This suggests progress in self-driving capabilities.

Musk has stated his intention to initiate a robotaxi service in Texas and California later this year. Recent reports from Bloomberg indicate that Tesla has been engaging with municipal authorities in Austin and throughout Texas to explore the feasibility of launching such a service.

The regulatory environment in California presents greater challenges for deploying a robotaxi service. Companies like Waymo, currently operating the sole commercial robotaxi fleet in the U.S., adopted a phased approach, beginning with test vehicles and gradually expanding to autonomous operation with safety drivers, ultimately removing human operators.

Texas, known for its favorable stance towards Musk’s ventures, appears more inclined to permit Tesla to pursue a more accelerated path toward achieving full autonomy. This could involve accepting a higher degree of risk in the development and deployment process.

Challenges and Approaches to Robotaxi Deployment

The development of robotaxis requires navigating complex regulatory landscapes and ensuring public safety. Different states are adopting varying approaches to testing and deployment.

• California: A cautious, phased approach with extensive testing and safety operator requirements.
• Texas: A potentially more permissive environment, allowing for faster development and deployment.

The success of Tesla’s robotaxi ambitions hinges on demonstrating the safety and reliability of its autonomous driving technology, as well as securing regulatory approval in key markets.

Reflecting on Recent Performance

Despite significant conceptual advancements, these innovations are not projected to substantially impact Tesla’s financial results for the year 2024, which had previously shown signs of instability before the final quarter.

During the third quarter of 2024, the company announced sales totaling $25.2 billion and a profit of $2.2 billion. These figures represent a near standstill when contrasted with the corresponding quarter in 2023.

The question remains: how closely will the fourth quarter’s performance align with the previous year? Tesla’s revenue for the fourth quarter of 2023 reached $25.17 billion, accompanied by a net income of $7.9 billion, calculated according to Generally Accepted Accounting Principles (GAAP).

It’s important to note that this 2023 figure was exceptionally high, incorporating a one-time, non-cash tax benefit of $5.9 billion resulting from the release of valuation allowance on specific deferred tax assets.

A more accurate assessment of the company’s financial health is provided by its operating income and adjusted earnings, which stood at $2.06 billion during the fourth quarter of 2023.

Throughout 2024, Tesla has continued to capitalize on the reluctance of other automotive manufacturers to fully embrace electric vehicle production. However, the long-term dependability of this revenue source is currently under scrutiny.

The company recorded $739 million in sales of regulatory credits during the third quarter of the previous year. These credits are purchased by other companies to offset their vehicle fleet emissions, representing a substantial income stream, second only to the $890 million in credits sold in the prior quarter.

Similar to many aspects of the relationship between Elon Musk and Donald Trump, Tesla’s strategic goals appear to be at odds with the current administration’s policies. Trump has expressed intentions to potentially revoke California’s waiver, which permits the state to establish its own emissions standards. Such a move could eliminate a significant revenue stream Tesla has frequently depended on for profitability.

Furthermore, Trump is already focusing on reducing funding for several Electric Vehicle (EV) charging programs from which Tesla currently benefits.