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Tesla Misses Revenue, Eps Expectations In Q4
Electric vehicle manufacturer Tesla (NASDAQ:TSLA) reported fourth-quarter and full-year 2024 earnings on Wednesday, Jan. 29, that missed analysts consensus expectations. Tesla reported adjusted earnings per share (EPS) of $0.73 which missed forecasts for $0.77. Revenue came in at $25.71 billion, falling short of the projected $27.26 billion. The results showcased a balance between strong advances in energy storage and challenges in the automotive sector.
Although Tesla showed impressive growth in energy storage and vehicle deliveries, its overall financial performance for the quarter highlighted pressures from reduced automotive revenue and operating margins due to aggressive pricing strategies and competitive market dynamics.
| Metric | Q4 2024 | Analysts' Estimate | Q4 2023 | Change (YOY) |
|---|---|---|---|---|
| Adjusted EPS | $0.73 | $0.77 | $0.71 | 2.8% |
| Revenue | $25.71 billion | $27.26 billion | $25.17 billion | 2.1% |
| Operating income | $1.58 billion | -- | $2.06 billion | (23%) |
| Operating margin | 6.2% | -- | 8.2% | (2 pps) |
| Free cash flow | $2.03 billion | -- | $2.06 billion | (1.5%) |
| Automotive segment revenue | $19.8 billion | -- | $21.56 billion | (8%) |
Source: Tesla. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year over year. pps = Percentage points.
Overview of Tesla's Business
Tesla, a leader in the electric vehicle market, focuses on innovation in automotive technology, including self-driving capabilities and advances in energy storage. Its strategy revolves around scaling production efficiently through global manufacturing, particularly at its Gigafactories. The company recently prioritized expanding its energy sector with products like Powerwall and Megapack, both seeing substantial growth. Battery efficiency, autonomous driving technology, and competitive pricing remain key success factors for Tesla, reinforcing its market position.
One of Tesla's strategic focuses has been to reduce production costs and expand its automotive range through affordable models and autonomous vehicle technology. The launch of the Cybertruck and a lineup of new, accessible models are indicative of Tesla's commitment to expand its footprint and meet evolving consumer demands.
Quarterly Highlights
In Q4 2024, Tesla marked a new record in quarterly vehicle deliveries, reaching 495,570 units, a 2% increase from the previous year. This came amid a challenging market where average selling prices were under pressure. This trend results from pricing strategies and financing options, impacting revenue from the automotive segment, which fell to $19.8 billion, down 8% from Q4 of the previous year.
Continued investment in Full Self-Driving technology demonstrated Tesla's commitment to innovation, with the company self-reporting improvements in safety and the introduction of the Cortex training cluster for its AI systems. Tesla processed its first lithium concentrate at its new refinery, poised to begin operations in 2025, underscoring its advances in raw material processing for battery production.
Tesla's energy business remained robust, with revenues from energy generation and storage doubling to $3.06 billion, marking a 113% year-over-year increase. This growth is attributed to record energy storage deployments of 11 GWh with Powerwall and Megapack. The completion of Tesla's Megafactory in Shanghai further highlights its capacity-building to meet the rising global energy demand. Services and other revenue streams increased by 31%, indicating diversification and expansion beyond automotive sales.
Operating margins did decrease to 6.2%, compared to 8.2% a year prior, impacted by increased R&D expenses, particularly in AI and autonomous capabilities. One-time expenses included costs associated with the global rollout of new models. Despite these challenges, Tesla maintained a healthy liquidity position with $36.6 billion in cash and equivalents.
Outlook
Looking ahead, Tesla projects significant growth in its energy storage sector, anticipating at least a 50% increase in deployments for the upcoming year. The rollout of new vehicle models and enhancements in self-driving technology remain on track, with the Cybertruck's mass production expected to ramp up in 2026. This strategy reflects its continued emphasis on delivering cutting-edge technology at competitive price points.
Tesla’s management has confidently targeted vehicle sales growth of 20% to 30% in 2025, contingent on stable economic conditions. Investors will be observing how Tesla navigates its aggressive expansion plans, balancing ongoing product innovation with maintaining profitability and tackling competitive pressures from both legacy and new electric vehicle manufacturers.
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JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
