Tesla Q4 Misses By Record 41% & 2025 Growth Goal of 25% is Gone

Tesla's Automotive gross margin (ex-credits) hit lows not seen since the covid lockdowns at its US & China factories in Q2 2020

• Tesla’s Q4 results were the worst-quality set of earnings since Q2 2020 during the factory shutdowns worldwide due to the pandemic.

• While Q4 EPS appeared to only miss by 5%, stripping out a newly adopted accounting change to recognize its Bitcoin holdings ($0.15 per share), Tesla missed consensus estimates by 25%.

• Tesla boasted about its record-low costs per vehicle (both in its earnings release and on the earnings call) which is strange given that a bigger drop in average vehicle prices led to a 4.5-year low of 13.6% in Automotive gross margins (ex-credits).

• Tesla gave no guidance for 2025 vehicle sales despite Musk’s pump of “20% to 30% delivery growth next year” on the Q3 2024 earnings call. If anything, this goal has been massively tempered down (more details below).

• Tesla’s CFO effectively gave a warning for Q1 saying that all Model Y lines (66% of global capacity) will be retooled for the refreshed version during Q1 so there will be lost production. Estimates of this impact below show that Q1 should be an even uglier quarter than Q4 2024.

• In his relentless pumping of Tesla Full Self-Driving (FSD), Musk boldly proclaimed that Tesla would roll out “FSD unsupervised” in Texas by June and have “paid driverless” rides. Our sources called the Office of Austin’s Mayor and his aide is unaware of any communication between the Mayor and Musk regarding “driverless” Teslas operating there from June.

• There are still no details on how Tesla will handle the liabilities involved (casualty insurance, etc.) or how the regulatory procedures are going in California where Tesla will need permits from two regulatory agencies. Details below on why California could be tricky, which is likely why Musk was careful about making any big predictions about FSD in that state.

• Once again, Musk predicted that its humanoid bot, Optimus, would be worth more than anything at Tesla, which contradicted his other statement on the call where he said “FSD will be the largest asset-value increase in human history”. In fact, for much of the call, Musk sounded like he was making many statements in an off-the-cuff manner or “on the fly”.

• Musk said that Tesla will have to upgrade all FSD owners using Hardware 3 to the current Hardware 4. Aside from further clogging up Tesla’s overflowing service centers, this won’t be a cheap fix (details below).

• Since GM reported 2024 results on Monday, there is a short comparison of Tesla versus GM’s full-year results below. Even with record-high ZEV credits in 2024, Tesla was less profitable than GM on a variety of benchmarks.

• While Tesla’s stock closed down 2.3% at $389 yesterday, it closed up 4.1% in the after-hours. This is hard to understand given the horrible results, tempered-down guidance for 2025, and nothing new in terms of Musk’s pumps. It should be noted that the stock had fallen as low as $366 but turned positive 93 minutes before the call even began.