Tesla Q4 2024 Earnings Analysis
Dive into $TSLA Tesla’s Q4 2024 earnings with review of financial performance, key metrics, operating expenses, dilution, customer growth, future outlook
Demand
↗️Cars Delivered (495,570, +2.3% YoY) missed est by -2.2%🔴
↗️S/X and others Delivered (23,640, +2.9% YoY)
↗️3/Y Delivered (471,930, +2.3% YoY)
↘️Cars Produced (459,445, -7.2% YoY)
↗️S/X and others Produced (22,727, +24.8% YoY)
↘️3/Y Produced (436,718, -8.4% YoY)
↘️Global vehicle inventory 12 days of supply, -7 QoQ
Financial Results
↘️$25,707M rev (+2.1% YoY, +7.8% LQ) missed est by -5.1%🔴
↘️GM (16.3%, -1.4 PPs YoY)🟡
↗️Adjusted EBITDA Margin (19.1%, +3.4 PPs YoY)
↘️Operating Margin (6.2%, -2.0 PPs YoY)🟡
↘️FCF Margin (7.9%, -0.3 PPs YoY)🟡
↘️Net Margin (9.1%, -22.4 PPs YoY)🟡
↘️EPS $0.73 missed est by -6.4%
Revenue By Segments
Automotive
↘️$19,798M Total automotive Revenue (-8.2% YoY, 77.0% of total Revenue)
↘️Automotive GM excl. regulatory credits (13.6%, -3.6 PPs YoY)🟡
Energy generation and storage
↗️$3,061M Energy generation and storage Revenue (+112.9% YoY, 11.9% of total Revenue)
↗️Energy GM (25.2%, +3.4 PPs YoY)
Services
↗️$2,848M Services and other Revenue (+31.5% YoY, 11.1% of total Revenue)
↗️Services GM (4.2%, +1.5 PPs YoY)
↗️11,000 MWh Storage deployed (+243.5% YoY)
➡️6,975 Supercharger stations (+17.2% YoY)
↗️2,783 CAPEX (+18.9% YoY)
Operating expenses
↗️S&M+G&A/Revenue 5.1% (+0.0 PPs YoY)
↗️R&D/Revenue 5.0% (+0.6 PPs YoY)
Dilution
↘️SBC/rev 19%, -0.3 PPs QoQ
↗️Basic shares up 1.0% YoY, +0.3 PPs QoQ
↗️Diluted shares up 0.7% YoY, +0.6 PPs QoQ🟢
Key points from Tesla’s Fourth Quarter 2024 Earnings Call:
Financial Performance
Tesla reported Q4 2024 free cash flow of $2 billion, bringing full-year free cash flow to $3.6 billion despite a $2.4 billion increase in CapEx. The company reduced its cost per vehicle below $35,000, mainly through lower material costs.
Lower ASPs and incentives impacted margins, leading to a quarter-over-quarter decline in profitability. Q4 net income included a $600 million mark-to-market benefit from Bitcoin, following a new digital asset accounting standard. AI-related expenses increased, but operating costs remained controlled, reflecting a focus on efficient spending.
CapEx for 2025 will remain flat year-over-year, despite continued investments in AI, robotics, and manufacturing infrastructure. AI-related CapEx, including training infrastructure for FSD and Optimus, has reached $5 billion.
Automotive
Tesla delivered vehicles at an annualized rate of nearly 2 million, with Model Y as the world’s best-selling vehicle in 2024. The company reduced inventory to a two-year low through financing incentives and pricing adjustments.
A redesigned Model Y launches in Q1 2025, with all factories upgrading simultaneously. This shift may disrupt Q1 production, but long-term margins should improve as efficiencies scale.
A new affordable model arrives in H1 2025, expanding Tesla’s market reach. Mass production of Tesla Semi starts in late 2025 after completing the Reno factory. The Semi will provide a total cost-of-ownership advantage over diesel trucks.
Energy Storage
Q4 2024 set a record for energy storage deployments, with over 50% year-over-year growth expected in 2025. Demand remains strong for MegaPack and Powerwall, but supply constraints limit deployments.
The Shanghai MegaFactory is operational, with a third energy factory in development. Tesla expects demand to exceed production capacity, requiring better battery allocation between vehicles and storage.
Full Self-Driving (FSD)
Unsupervised FSD launches in Austin in June 2025 as a paid service, with expansion to other U.S. cities by year-end and nationwide coverage in 2026.
Tesla’s safety metrics show a crash every 5.9 million miles with FSD, compared to 700,000 miles without it. Several automakers are in discussions to license FSD, but only high-volume deals will be considered.
Tesla is expanding AI training infrastructure at Gigafactory Texas and transitioning from Hardware 3 to Hardware 4. Some existing customers will require hardware upgrades.
Battery Production
Battery production constraints will limit 2025 growth, impacting both vehicle and energy storage output. Tesla is focused on increasing gigawatt-hour production to meet demand.
The company continues optimizing supply chain efficiency and reducing the cost per kilowatt-hour of production. Battery allocation remains a challenge, balancing vehicle and storage needs.
Cybertruck
Tesla did not disclose specific Cybertruck deliveries, but the production ramp is ongoing. The company is focused on cost efficiency and manufacturing scalability, as the unique design presents production challenges.
New Model Y
A global Model Y update begins in Q1 2025, marking a major manufacturing transition. All Tesla factories will switch simultaneously, which could temporarily lower margins but boost long-term efficiency and cost savings.
New Affordable Model
A lower-cost model launches in H1 2025, targeting mass-market adoption while integrating FSD and software monetization. Pricing, design, and production details remain undisclosed.
Optimus
Tesla plans to produce 10,000 Optimus units in 2025, initially for factory use. A second-generation model launches in 2026, with mass production scaling to 10,000 units per month, and later 100,000 units per month.
Elon Musk estimates Optimus could generate over $10 trillion in revenue, surpassing vehicle and energy segments in long-term value.
Capital Expenditures (CapEx)
2025 CapEx remains flat, despite expansions in FSD, AI, and robotics. AI-related investments total $5 billion, primarily for Cortex AI clusters and Optimus development. Tesla is balancing profitability and long-term technology growth.
Future Outlook
Elon Musk predicts 2025 will be Tesla’s most important year, with autonomy, energy storage, and robotics driving the next phase of growth.
Regulatory approvals remain the key challenge for FSD expansion, especially in Europe and China. Tesla aims to transition from a vehicle manufacturer to an AI and robotics leader, setting the stage for exponential growth by 2026-2028.
Management comments on the earnings call.
Automotive: Record Deliveries and Market Leadership
Elon Musk, Chief Executive Officer
"In Q4, we set a record and delivered vehicles at an annualized rate of nearly 2 million a year. Model Y was the best-selling vehicle of any kind for 2024—not just the best electric vehicle, but the best vehicle of any kind on earth. We are staying focused on maximizing volumes while also doubling down on autonomy."
Vaibhav Taneja, Chief Financial Officer
"Our focus in Q4 was to reduce inventory levels in the automotive business, and we accomplished that by ending the quarter with the lowest finished goods inventory in the last two years. This was achieved through attractive financing options and strategic programs, which impacted ASPs but ensured a healthy demand environment."
Energy Storage: Scaling Production for High Demand
Elon Musk, Chief Executive Officer
"Energy storage is a big deal and will become even more critical in the future. The demand for total gigawatt-hours of batteries—whether for mobile or stationary applications—is growing at an enormous rate. Our second factory in Shanghai is now online, and we are building a third factory to further scale production. Even with these expansions, demand will far outstrip supply."
Vaibhav Taneja, Chief Financial Officer
"While quarterly deployments may fluctuate, we expect at least 50% growth in energy storage deployments in 2025. Both MegaPack and Powerwall continue to be supply constrained, and we are working aggressively to ramp up production capacity."
Full Self-Driving (FSD): The Road to Full Autonomy
Elon Musk, Chief Executive Officer
"The reality of autonomy is upon us. My number one recommendation for skeptics is simple: try it. The only people who doubt our progress are those who haven’t experienced the latest version of FSD. We are launching unsupervised full self-driving as a paid service in Austin in June. We already have thousands of Teslas operating fully autonomously at our Fremont and Texas factories, and we will be scaling this across U.S. cities before expanding globally."
Elon Musk, Chief Executive Officer
"We are seeing significant interest from a number of major car companies about licensing Tesla’s Full Self-Driving technology. As we prove the system’s capabilities in real-world operations, the demand for our FSD software will increase significantly. I believe there will come a time when not having FSD will put automakers at a severe disadvantage."
Ashok Elluswamy, Director of Autopilot Software
"Version 14 of FSD will bring even more improvements, building on the success of Photon to Control. We are scaling the model size, increasing context memory, and refining the dataset with millions of real-world interventions to continuously improve safety and performance."
New Models: Next-Generation Vehicle Strategy
Vaibhav Taneja, Chief Financial Officer
"We recently started taking orders for the new Model Y, and all our factories will begin producing the updated version next month. While this is an unprecedented move—updating the best-selling car globally across all factories at the same time—we are confident in our team’s ability to ramp production quickly. However, this transition will result in several weeks of lost production in Q1, impacting margins temporarily."
Vaibhav Taneja, Chief Financial Officer
"We are still on track to launch a more affordable model in the first half of 2025. This vehicle will expand our lineup, offering a compelling combination of price, performance, and software capability. Our total cost of ownership advantage will remain strong as we continue to integrate the best autonomy features in every model."
Optimus: The Future of Humanoid Robotics
Elon Musk, Chief Executive Officer
"We are designing Optimus to be the most advanced humanoid robot ever built. The production target for this year is 10,000 units, and while it will initially be used within our factories, we plan to scale production rapidly. I expect an order-of-magnitude ramp year over year, which could put us at over 100 million units annually within a few years."
Elon Musk, Chief Executive Officer
"Long-term, Optimus has the potential to generate over $10 trillion in revenue. It’s a difficult path, but I believe Optimus will become the most valuable product we’ve ever created, exceeding even our vehicle and energy businesses. The demand will be there—the challenge is scaling manufacturing efficiently."
Challenges: Supply Chain, Regulations, and Market Pressures
Elon Musk, Chief Executive Officer
"Our current constraint is battery production. We need to significantly increase gigawatt-hour output this year to meet the demand for both vehicles and energy storage. This is a priority, and we are working on addressing this bottleneck as quickly as possible."
Vaibhav Taneja, Chief Financial Officer
"There is a lot of uncertainty around tariffs. While we have localized supply chains in many regions, we still rely on components from across the world. Any new tariffs or excess capacity from competitors will impact our business and profitability, and we are actively monitoring these developments."
Future Outlook: 2025 as a Pivotal Year
Elon Musk, Chief Executive Officer
"2025 will be the most important year in our company’s history—perhaps even more significant than the launch of the Model S or Model 3. We are at the inflection point of real-world AI, autonomy, and robotics, and the foundation we are laying now will define the future."
Elon Musk, Chief Executive Officer
"I see a path where our company could be the most valuable in the world—by far. Maybe even worth more than the next five companies combined. It is an extremely difficult path, but it is achievable. The key drivers will be autonomous vehicles and humanoid robots, both of which will redefine entire industries."
Vaibhav Taneja, Chief Financial Officer
"We continue to be disciplined with our capital expenditures, ensuring every investment aligns with our long-term strategy. Despite our aggressive expansion in AI, robotics, and infrastructure, we expect 2025 CapEx to remain flat year-over-year, maximizing efficiency while scaling our core businesses."
Elon Musk, Chief Executive Officer
"There is no company in the world that is as good at real-world AI as we are. I don’t even know who is in second place—it would require a telescope to see them. By 2026 and 2027, I expect exponential growth in autonomy, robotics, and energy, positioning us as the leader in the AI-powered automation era."
Thoughts on Tesla Earnings Report $TSLA:
🟢 Positive
Q4 2024 free cash flow reached $2 billion, with full-year free cash flow at $3.6 billion, despite a $2.4 billion CapEx increase.
Model Y became the world’s best-selling vehicle in 2024, with deliveries nearing 2 million annually.
Energy storage deployments hit record levels, with 50% YoY growth expected in 2025.
Unsupervised FSD launches in Austin by June 2025, with nationwide expansion targeted for 2026.
Tesla’s safety data shows FSD reduces crash rates by 8.5x compared to manual driving.
Shanghai MegaFactory operational, and third energy factory in development to meet high demand.
Tesla Semi production begins in late 2025, positioning it as a cost-efficient alternative to diesel trucks.
Optimus production starts in 2025 with 10,000 units, scaling to 100,000 units per month long term.
2025 CapEx remains flat, despite continued investments in AI, robotics, and manufacturing.
🟡 Neutral
Redesigned Model Y launches in Q1 2025, upgrading all factories simultaneously. Short-term disruptions expected, but long-term margin gains anticipated.
New affordable model set for H1 2025, but pricing and production details remain undisclosed.
FSD licensing discussions ongoing, but only high-volume partnerships will be considered.
Cybertruck ramping up, but delivery numbers remain undisclosed.
🔴 Negative
Lower ASPs and incentives impacted margins, leading to a quarter-over-quarter decline in profitability.
Battery production constraints limiting 2025 growth, affecting both vehicles and energy storage.
Regulatory hurdles delaying FSD expansion in Europe and China.
Some customers will require FSD hardware upgrades, increasing costs.