Tesla Predicts Slower Production Growth, Stock Falls

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Written By Marcus Reynolds

Tesla’s Q4 Earnings Disappointment and Stock Decline

Tesla (TSLA) experienced a 12% drop in its stock value on Thursday following its fourth-quarter earnings report which was released on Wednesday.

The report revealed earnings that fell short of estimates and a subdued full-year production outlook. Tesla’s fourth-quarter revenue was $25.17 billion. This was slightly lower than the expected $25.87 billion, marking a modest 3% increase from the previous year.

Credit: DepositPhotos

The adjusted EPS stood at $0.71, just below the anticipated $0.73. Adjusted net income reached $2.48 billion. This did not quite meet Wall Street’s expectation of $2.61 billion.

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Full-Year Production Outlook Falls Short

Looking ahead, Tesla indicated that its vehicle volume growth rate in 2024 might be considerably lower than in 2023.

This is attributed to the focus on launching the next-generation vehicle at Gigafactory Texas, suggesting that the company might not meet the Street’s forecast of 2.19 million vehicles, which would represent a 21% increase from 2023.

Elon Musk Confirms Next-Gen Vehicle Launch

On a call with analysts, CEO Elon Musk confirmed that Tesla’s next-generation vehicle is slated for release in the second half of 2025.

He also mentioned progress on Tesla’s next-gen manufacturing platform, stating, “We are focused on bringing the next-generation platform to market as quickly as we can, with the plan to start production at Gigafactory Texas. This platform will revolutionize how vehicles are manufactured.”

Musk added, “We’re very far along on our next-gen low-cost vehicle… This is a revolutionary manufacturing system, far more advanced than any other in the world.”

Profitability Challenges and Margin Pressures

Tesla’s profitability has likely been impacted by margin pressures, a result of cost-cutting initiatives that started in late 2022.

The fourth-quarter gross margin was reported at 17.6%. This is below the estimated 18.1% and a decrease from the 17.9% margin in Q3.

External Factors Affecting Tesla’s Performance

Several external factors have also influenced Tesla’s performance. These include Hertz reducing its fleet of EVs, price cuts in China, a production halt in Berlin, and Musk’s call for more stock.

Despite these challenges, Tesla reported a record-breaking 484,507 deliveries in Q4, slightly surpassing Wall Street estimates and marking the highest quarter in the company’s history.

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Year-Over-Year Growth and Cybertruck Update

For the year, Tesla’s vehicle deliveries grew 38% to 1.81 million, and production increased 35% to 1.85 million.

Although this was below their 50% CAGR target, disruptions due to factory shutdowns and improvements in Q3 were cited as reasons.

The production ramp for the Cybertruck is expected to be longer than for other models, with Musk noting that “[Cybertruck] demand is off the hook.”

Musk’s Concerns About Shareholder Influence

In addressing his concerns about shareholder influence, Musk expressed worry that, given his current shareholding, he could lose significant influence over the company’s direction.

Credit: DepositPhotos

He cited the risk of major shareholders making decisions that could undermine his control, emphasizing his aim to be an effective steward of Tesla’s technology rather than seeking additional economic benefits.

This article highlights the various challenges and strategic directions of Tesla, as it navigates a competitive and rapidly evolving automotive and technology landscape.

Elon Musk’s leadership and vision for the future of Tesla remain central to the company’s efforts in maintaining its position as a leading innovator in the electric vehicle market and tapping into the potential in front of it.

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