Tesla reported a quarterly profit of $2.6 billion, meeting expectations amidst a tough automotive market. Investors now see the company as a tech leader, with a market value over $1.2 trillion, outpacing traditional automakers. Despite an 8% drop in EV revenue, the energy division thrived, generating $3 billion. Elon Musk highlighted future AI investments and plans for autonomous vehicles and the Optimus robot. A budget model is set for production in 2025, as competition intensifies, particularly in China.
Tesla’s Latest Earnings: A Mixed Bag for Investors
Tesla, the trailblazer in the electric vehicle market, announced an adjusted quarterly profit of $2.6 billion, which is slightly above last year’s numbers and aligns with analysts’ expectations. Given the challenging climate for the automotive industry, this outcome is commendable for a car manufacturer.
Shifting Perceptions: From Car Manufacturer to Tech Giant
However, Tesla faces a unique challenge: investors are increasingly viewing the Austin-based company not merely as a car manufacturer but as a leading global technology enterprise. With a staggering market valuation exceeding $1.2 trillion, Tesla’s worth is significantly higher than that of traditional automotive giants like Volkswagen, Ford, or Toyota, which produce far more vehicles.
Investors anticipate rapid growth from a company of Tesla’s stature, rather than mere stability. Despite this, the response from investors on Wednesday was favorable, as CEO Elon Musk outlined promising prospects for the company.
After hours, Tesla’s stock saw a positive uptick in response to the financial results and future plans presented. The market had largely anticipated challenges in the automotive sector, as Tesla had disclosed its sales figures weeks prior. Nonetheless, the Texas-based firm managed to surprise investors positively in its ancillary sectors.
The ongoing price war in the electric vehicle market continues to impact Tesla’s core business. In the fourth quarter, the company’s electric vehicle deliveries remained stable, yet revenue from this segment dropped by 8% year-over-year, totaling $19.8 billion. Conversely, Tesla’s energy division thrived, generating $3 billion in revenue—more than double compared to the same quarter last year. This growth is attributed to an increase in battery sales for residential and commercial use, helping to mitigate the decline in the core automotive business.
During the earnings call and discussions with analysts, Musk emphasized future initiatives fueled by substantial investments in artificial intelligence. He expressed confidence that these advancements would position Tesla as the most valuable company globally. Key projects include autonomous vehicles and robotaxis, alongside the development of the humanoid robot, Optimus.
While Musk did not provide a detailed timeline for the Optimus robot, he mentioned plans to produce a few thousand units by 2025, primarily for use within Tesla’s factories. He lauded the robot’s capabilities, suggesting it could perform tasks such as playing the piano and sewing.
As for fully autonomous vehicles that require no driver supervision, Musk announced plans to introduce these in Austin starting June. He stated that the company aims to “just dip a toe in the water” to ensure safety, with intentions to expand this technology rapidly throughout California and other U.S. regions by the end of the year, and globally by late 2026. Furthermore, the Cybercab, which was introduced last autumn, is expected to enter production in larger quantities starting in 2026, designed to operate without traditional driving controls.
Despite these ambitious plans, Tesla is currently trailing behind Waymo, which has already launched a commercial self-driving taxi service in several U.S. cities. Nonetheless, Tesla maintains that its vehicles can be manufactured more cost-effectively, enabling them to be the first to achieve mass-market readiness.
Another variable affecting Tesla’s trajectory is the political landscape under the new administration. While Musk has close ties to the president, the potential policy changes could impact Tesla’s profitability. The company’s valuation soared following Trump’s election, driven by investor optimism regarding reduced regulatory hurdles for self-driving cars. However, proposed changes could hinder Tesla’s emissions credit business, which has contributed significantly to its profits over the years.
Musk has previously indicated that Tesla would soon unveil a more affordable model to bolster its market position in key regions such as China, Europe, and the U.S. The intense competition, particularly in China—where state-subsidized manufacturers engage in aggressive price wars—poses a significant threat to Tesla’s revenue and profit margins.
On Wednesday, Musk reiterated that production of this budget-friendly vehicle is slated to begin in the first half of 2025. In the meantime, Tesla customers can look forward to a revised version of the popular Model Y, set to launch in March.
This latest earnings presentation is unlikely to shift Tesla’s fundamental market valuation. The stock remains a speculative investment, with holders viewing Tesla as a transformative technology company rather than a conventional car manufacturer. Musk has emphasized that 2025 will be a pivotal year for Tesla, and investors are eagerly awaiting the promised innovations.