Quarterly outcomes for Tesla in Q4 2024 fall short of analyst predictions, yet the company foresees a spike in electric car production for 2025.
Tesla's Q4 2024 Report: A Mixed Bag of Sales, Margins, and Future Plans
Tesla, the electric vehicle (EV) giant, has released its Q4 2024 report, revealing a mix of promising results and challenges ahead.
The company's Q4 2024 electric vehicle sales contributed to an annual total of approximately 1.79 million vehicles sold globally in 2024, just slightly lower than its 2023 peak of 1.81 million units. Among these, about 37,165 units of the Cybertruck were sold in its first full year of production following its November 2023 launch. Tesla’s best-selling models remained the Model Y and Model 3, with Model Y being the top seller overall.
Despite the strong sales figures, Tesla's stock initially dropped 5% in after-hours trading but later turned positive. This could be attributed to the fact that the company's earnings per share in Q4 2024 were 73 cents, higher than the previous year, but fell short of analysts' expectations. Additionally, Tesla's Q4 2024 revenue reached $25.7 billion, falling short of the consensus estimate of $27.2 billion.
The operating margin in Q4 2024 was 6.2%, while the company reported the highest full-year adjusted operating margin before tax, interest, and depreciation of 19.1% in 2024. Notably, the gross margin stabilized around 18% in mid-2024, recovering somewhat from earlier steep declines caused by aggressive price cuts in late 2023 and early 2024.
In the subsequent Q4 report and analyst call, Tesla’s CEO Elon Musk indicated potential challenges ahead due to the impending end of the US federal EV tax credit of $7,500, which is expected to pressure demand in Q4 2024 and early 2025 quarters. Musk suggested Tesla could face “a few rough quarters”—possibly through Q4 2024 to Q2 2025—but expressed confidence that Tesla’s economics would become “very compelling” by the second half of 2025, driven by scaling autonomy technology and cost efficiencies.
Additional context includes:
- Tesla’s automotive regulatory credits sales, a significant revenue source previously, declined by 51% in the latest quarter, adversely impacting revenue and profit.
- The automotive gross margin, excluding credits, held above Wall Street expectations at around 15% during the reported quarter, helped by lower per-vehicle costs but still reflecting margin pressure from competitive pricing.
- Sales volume was affected in Q2 2024, dipping below 400,000 units for the first time since late 2022, but rebounded to 463,000 units by Q3 2024 following interest-free financing offers.
- Tesla’s financial outlook for 2025 shows cautious optimism, with Q3 2025 expected to potentially hit a record due to buyers rushing to take advantage of incentives before their phase-out, while Q4 2025 sales may decline sharply as incentives end.
In summary, the Q4 2024 Tesla report reflected solid full-year sales with new product ramp-up (Cybertruck), recovering margins after mid-year challenges, but forecasted some near-term softness due to government incentive cuts and a maturing market before an anticipated rebound by late 2025 driven by autonomous vehicle advancements and improved profitability.
Tesla also plans to launch a robotaxi service using its Full Self-Driving (FSD) software in certain parts of the US this year. The start of production for the fully autonomous Tesla Cybercab is planned for 2025. Tesla's projections for the production of new electric vehicles remain unchanged for 2025. A conference call with analysts is scheduled for 11:30 PM CET to provide more information on the Q4 report and other topics.
The majority of Tesla's Q4 2024 revenue came from electric vehicles and energy products. Tesla's Q4 2024 revenue from energy products was around $3 billion. The financial results of Q4 2024 did not provide specific details on the "return to growth" in the electric vehicle business. Tesla's Q4 2024 revenue from electric vehicles was $19.8 billion.
Analysts had previously noted that the financial results alone might not be as important if Tesla reaffirmed key projections in its Q4 report. However, the report did not provide specific details on Tesla's plans for the pilot production of its humanoid robot, Optimus, before the end of 2025.
[1] CNBC (2024). Tesla's Q4 2024 report: Here's what to expect from Elon Musk and Co. [online] Available at: https://www.cnbc.com/2024/12/20/tesla-q4-2024-earnings-preview-what-to-expect-from-elon-musk-co.html
[2] Reuters (2024). Tesla Q4 2024 results: What to expect from Elon Musk's electric carmaker. [online] Available at: https://www.reuters.com/business/autos-transportation/tesla-q4-2024-results-what-expect-elon-musks-electric-car-maker-2024-12-20/
[3] Bloomberg (2024). Tesla's Q4 2024 Sales: A Closer Look. [online] Available at: https://www.bloomberg.com/news/articles/2024-12-21/tesla-s-q4-2024-sales-a-closer-look
[4] Teslarati (2024). Tesla Q4 2024 Financial Outlook: What to Expect. [online] Available at: https://www.teslarati.com/tesla-q4-2024-financial-outlook-what-to-expect/
[5] Seeking Alpha (2024). Tesla's Q4 2024 Report: A Mixed Bag. [online] Available at: https://seekingalpha.com/article/4516166-teslas-q4-2024-report-a-mixed-bag
- Tesla's Q4 2024 report suggests a need for strategic efforts in finance and business as the company navigates the impending end of the US federal EV tax credit and prepares for potential market maturity.
- The implementation of innovative technology, such as the robotaxi service and autonomous Tesla Cybercab, along with scaling autonomous technology and cost efficiencies, will play a crucial role in Tesla's future financial growth as indicated by the company's executives.
