Tesla’s adjusted profits for the fourth quarter saw a modest increase, driven by efforts to boost electric vehicle sales through offers like zero financing and other incentives. However, the results still fell short of Wall Street’s expectations.
The company, led by Elon Musk, reported a 3% rise in adjusted net income for the quarter, reaching $2.6 billion or 73 cents per share, which was below analysts’ estimate of 77 cents per share.
Tesla’s stock initially dropped after the earnings report, but quickly rebounded by more than 4% after Musk shared during a conference call that the company was on track to roll out unsupervised “full self-driving” technology as a paid service in Austin by June.
Morningstar analyst Seth Goldstein noted that Musk’s announcement marked a significant shift, saying the launch timeline went from being a vague hope for 2025 to a concrete plan.
Tesla has seen a decline in market share in various countries, facing increasing competition from traditional automakers and other electric vehicle (EV) companies like China’s BYD. Despite this, Tesla’s stock has experienced a significant increase, rising over 50% since President Donald Trump’s election. This surge is largely driven by investor optimism that Musk’s role as an advisor to the new administration will benefit the company.
In its shareholder letter and analyst call, Tesla expressed its goal to boost sales by reducing vehicle costs, noting that one of its cost measures had dropped below $35,000, marking the lowest price in the company’s history. Production of more affordable models is expected to begin in the first half of the year, with Elon Musk stressing that “maximizing volume” would be the company’s main focus.
However, during the conference call, Musk quickly shifted focus to other areas of the business, causing the stock to rise. He spoke about the potential of AI and robotics, claiming they would yield significant results. Musk also shared his vision of Tesla becoming “the most valuable company in the world—by far, not even close,” surpassing tech giants like Apple, Microsoft, and Nvidia. Currently, Tesla holds the position of the seventh-most valuable company in the S&P 500, with a market value of $1.25 trillion.
Tesla’s unadjusted profits for the October to December period saw a sharp decline, though the comparison to the previous year is skewed due to a significant one-time tax benefit in 2023. The company reported earnings of $2.31 billion for the quarter, a 71% drop from the $7.93 billion profit in the same period last year.
Revenue increased by 2%, reaching $25.7 billion, but this was still below Wall Street’s expectations of $27.1 billion. To boost demand for its electric vehicles, Tesla offered several incentives, including low-interest loans and price reductions. However, Tesla’s gross profit margin fell to 16.3% for the quarter, down 1.3 percentage points compared to the previous year.
Earlier in the month, Tesla revealed it sold 1.79 million vehicles in 2024, marking the first decline in over a decade, despite offering 0% financing, free charging, and low-priced leases. However, the fourth quarter showed signs of recovery, with a record 495,570 vehicles sold.
Wedbush analyst Dan Ives, a strong supporter of Tesla, noted that both bulls and bears had their points validated in the latest results. “The bulls got what they wanted, and the bears got data to support them as well,” Ives said, adding that ultimately, the future of Tesla’s stock will depend on autonomous driving, which he believes is the area where Musk sounded most optimistic.
For the full year, Tesla reported adjusted profits of $8.42 billion, a 23% drop compared to the previous year.
Investors are hopeful that Musk’s close ties with former President Trump could result in lighter regulations for Tesla, fewer investigations, and faster progress on autonomous driving. However, the Trump administration has promised to reduce government incentives for EV buyers and ease emission standards, which could hurt Tesla, especially since it generates significant revenue from selling “regulatory credits” to other automakers who fall short of those standards.
Tesla’s latest financial report revealed that in the fourth quarter, the company sold $692 million in regulatory credits—a crucial source of cash that could be at risk if Trump follows through on his plans.