Elon Musk has expressed confidence in a rebound for Tesla’s sales in 2024, following a year of underwhelming performance. He attributes this optimism to advances in artificial intelligence that could lead to the introduction of unsupervised, self-driving vehicles on Texas roads by June.
This positive outlook comes despite disappointing fourth-quarter results, where both profit and revenue fell short of expectations. Earlier this month, Tesla also reported its first annual decline in electric vehicle sales in over a decade.
During a recent announcement, Musk revealed that Tesla intends to launch a driverless ride-hailing service in Austin, Texas, within the next six months. The company also plans to unveil a prototype of its Optimus humanoid robot this year, with production of a fleet of autonomous “cybercabs” anticipated to start in 2026.
Musk noted that significant investments were made in 2024 in manufacturing, artificial intelligence, and robotics, which he believes will yield substantial results in the future. He hinted at an exciting year ahead in 2026, followed by an even stronger 2027 and 2028.
Additionally, he confirmed plans to release an updated version of the Model Y SUV, which is currently the best-selling car globally, along with more affordable models in the first half of the year to boost lagging sales, although specific details were not provided.
Musk expressed a vision for Tesla to become the most valuable company in the world, stating, “There is a path where Tesla is worth more than the next top five companies combined.”
In reaction to the latest results, Tesla shares experienced fluctuations — initially declining by 4% in after-hours trading before bouncing back to a 4% increase. Tesla currently ranks as the eighth-largest company in the world, having significantly increased its value since Musk’s financial involvement in political campaigns.
Analysts expressed concerns over the company’s performance. Barclays analyst Dan Levy pointed out that while Musk spoke of a return to vehicle growth, no specific targets were mentioned, contrasting with previous expectations for 20% to 30% growth. He described the fourth quarter as a reality check for Tesla’s stock, which has shown signs of disconnect from its underlying fundamentals.
Musk downplayed the potential repercussions of a possible cancellation of federal EV tax credits, suggesting that the shift to autonomous and electric transport would continue in a manner akin to the transition from steam to internal combustion engines.
Reflecting trends seen in the technology sector, Tesla disclosed a significant increase in AI investments during the quarter. Capital expenditures rose by 21% to $2.8 billion as the company developed a training cluster of 50,000 linked Nvidia H100 chips, named “Cortex,” to enhance its self-driving technology.
For Tesla to roll out its Robotaxi service, which is planned for volume production starting in 2026, improving self-driving capabilities and securing regulatory approvals will be crucial.
Addressing increased competition, Musk claimed that Tesla has a superior advantage through its ability to analyze vast amounts of video data from its vehicles, placing it ahead of competitors like Google and OpenAI.
Investors had anticipated lackluster results. Tesla reported a 2.3% increase in global deliveries during the fourth quarter, totaling 495,570 vehicles. While the company retains its lead over China’s BYD, the figures fell short of expectations, marking its first annual decline in EV deliveries since 2011.
Adjusted net income for the fourth quarter increased by 3% to $2.5 billion, but still did not meet the $2.6 billion analysts had anticipated. Revenue rose by 2% to $25.7 billion, falling short of the $27.2 billion expected by analysts.
The company’s operating margin decreased from 8.2% to 6.2%, attributed to lower average selling prices for its core models due to substantial discounting and increased operational costs associated with AI and research and development projects.
Despite the enthusiasm surrounding new robotic developments, approximately 80% of Tesla’s revenue still comes from vehicle sales. The company did benefit from increased sales of regulatory credits to other manufacturers, experiencing a 60% year-on-year revenue boost from this segment, totaling $692 million.
Additionally, Tesla’s energy generation and battery storage division saw substantial growth, with revenues more than doubling to $3.1 billion in the fourth quarter.
photo credit: www.ft.com
