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The beats fade and the call begins
As we waited for Tesla’s earnings call to begin, we were treated to a typical mix of electronica. Right before the call started, musician Yehezkel Raz’s song “Fata Morgana” played in the background. And now, the call.
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Tempering the hype
Thomas Monteiro, senior analyst at Investing.com, tempered the Tesla hype with a dose of reality. He says that the “promise of more — and revolutionary — developments” in AV and production, coupled with expected de-regulation, are the only things keeping Tesla’s stock afloat after the 60% rally since the presidential election.
On Musk’s claims that Tesla’s auto business will “return to growth” this year, Monteiro says there are “few reasons to believe that right now.” EV demand is soft across the board and the hype around Tesla is trending down, “mainly due to the lack of new and exciting innovations over the past few years but also due to severe brand devaluation.”
“Most importantly, Musk & Co haven’t come close to figuring out how to get more cars out on the street without severe margin compression,” Monteiro said. “As we hold on to the promise of future developments that will improve the operation on that side, time goes by, and Tesla remains the same ever-sluggish operation quarter after quarter.”
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Pics of Tesla Dojo! I mean Cortex!
Image Credits:Tesla Check out these pics of Tesla’s Cortex supercomputer — about 50,000 Nvidia H100 GPUs put together in a cluster at Giga Texas. If it looks familiar, it’s because Musk has posted similar photos of Dojo, Tesla’s other supercomputer that’s meant to be the best supercomputer and turn FSD dreams into reality.
Just noting that in July 2024, Musk posted on X that Dojo 1 will have “roughly 8k H100-equivalent of training online by end of year.” Well 2024 has come and gone, and so far, no updates on how that’s going.
Image Credits:Tesla -
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Tesla FSD promises
Tesla claims 2025 will be a “seminal year” in its history thanks to rapid improvement of the supervised version of its branded Full Self-Driving Software. (FSD, as it’s called, is an upgraded version of its advanced driver-assistance system that includes some automated features and requires the driver to have their hands on wheel.)
Tesla has used lofty language like this before, but it’s notable the company is sticking to previously shared timelines for releasing an “unsupervised” version of FSD. Tesla hasn’t provided a ton of specifics on what an “unsupervised” version could mean in the real world. It’s possible this could be a hands-free, eyes-off system that works in certain conditions, like highways (à la Mercedes Drive Pilot). It could also mean a fully driverless system that would handle all driving in certain environments with no expectation for the human driver to take control.
Tesla said in its shareholder letter that it expects to begin launching an unsupervised FSD option for customers later this year in parts of the U.S. The company said it will also continue to work on launching a supervised version of FSD in Europe and China in 2025.
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Back in the green
And just like that, Tesla shares swung from a 3.5% fall in after-hours trading to a 4.7% gain. It has since settled to a 3.47% gain. An impeccably rational market we have here.
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Not quite enough lithium for 1 million EVs by 2025
Image Credits:Tesla Time for another reminder of something Elon promised.
Back in 2023, Tesla broke ground on a Texas lithium refinery. At the time, Musk said the refinery would produce enough battery-grade lithium for 1 million electric vehicles by 2025.
Tesla’s earnings report includes an update about the refinery. Tesla says it has processed its first “spodumene (lithium-containing concentrate) through the front-end of the lithium refinery” and that the material was “on-spec.” In other words, it’s a first step and definitely not close to battery-grade yet.
Tesla plans to start bringing the plant online in 2025 before actually scaling production.
Just a little reminder that this lithium refinery is in Corpus Christi, Texas, a part of the state that is so dry that the local water company regularly limits lawn watering and car washing. Tesla has reportedly said it would require 8 million gallons of water per day to refine lithium at that factory.
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Tesla’s preferred metric slips again
Once upon a time in January 2023, Tesla’s CFO (at the time) Zachary Kirkhorn declared during an earnings call that Tesla was “most focused” on its operating margin.
At the time, this measure of success was hovering around 16% — unheard of in the automotive industry, where it usually sits in the single digits.
That number has collapsed since Kirkhorn’s comments, thanks in large part to Tesla’s price cuts. It bottomed out at 5.5% in the first quarter of 2024. It rebounded after that, reaching as high as 10.8% in the third quarter. But it cratered again in Q4 — dropping to 6.2%. In the shareholder letter, Tesla blamed lower average selling prices, as well as “operating expenses driven by AI and other R&D projects.”
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Energy storage pops
Tesla’s energy storage business is growing by leaps and bounds. Some might say by a bigly amount.
The company generated $3.06 billion in revenue from its energy generation (that’s solar) and storage business in the fourth quarter. That is more than double the $1.44 billion it generated in the same period in 2023.
Looking at the full-year results, the news is just as rosy. Revenue on a full-year basis was $10.1 billion, up 67% from $6.04 billion in 2023.
Tesla said construction of Megafactory Shanghai was completed in December and will begin ramping this quarter, which should also help grow the business.
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Free money!
Tesla sold $692 million worth of regulatory credits to other automakers in the final quarter of 2024, accounting for more than a quarter of its profit.
For the full year, Tesla sold nearly $2.8 billion worth of these credits, which is notable because Musk’s buddy Trump wants to axe the program in California that enables Tesla to reap what is essentially free money.
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Return to growth
Tesla says in its shareholder letter that it expects “the vehicle business to return to growth in 2025” after deliveries fell in 2024. The company attributes this to the mysterious new models it plans to launch at some point in the first half of the year.
But that’s all Tesla says — just “growth,” no specifics. That could be another reason why shares are dragging.
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What happened to Dojo?
Image Credits:TechCrunch / Bryce Durbin Elon Musk has talked about Dojo for years, Tesla’s AI supercomputer that will supposedly be the cornerstone of the automaker’s autonomy ambitions. In fact, not too long ago, Musk said Tesla would “double down” on Dojo.
But lately, Musk has been quiet on Dojo. Instead, Tesla has for the past few months been touting the new “Cortex” supercomputer, which Tesla claimed in August 2024 would be “the world’s most powerful AI-training cluster.”
In Tesla’s shareholder deck, the company noted that it completed the deployment of Cortex in the fourth quarter, a training cluster built at Gigafactory Texas that’s made up of roughly 50,000 H100 Nvidia GPUs.
“Cortex helped enable V13 of FSD (Supervised)1, which boasts major improvements in safety and comfort thanks to 4.2x increase in data, higher resolution video inputs, 2x reduction in photon-to-control latency and redesigned controller, among other enhancements,” reads the report.
Dojo was meant to be Tesla’s custom-built supercomputer designed to train FSD, and eventually, Optimus and other real-world AI. What happened to those plans?
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Shares fall
The revenue miss has Wall Street mildly spooked. Tesla shares fell as much as 3.5% in after-hours trading following the release of the earnings report.
Of course, trading of Tesla shares is usually pretty volatile before, during, and after its edgelord CEO leads the company’s earnings call — so a lot can still change!
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Tesla earnings live updates: Promising ‘return to growth’ and cheaper cars
Tesla’s fourth-quarter and full-year earnings day is here — a highly anticipated report that is expected to be released after market close Wednesday. Tesla management, which will likely include CEO Elon Musk, will hold an earnings call at 5:30 p.m. ET.
This is the company’s first earnings call since Musk took a prominent role in the U.S. government under the Trump administration.
Follow our live updates before, during, and after earnings drop for all the latest insights and news from Tesla.
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