Tesla’s Q4 results fell short of Wall Street’s forecasts. Here’s why

Tesla’s fourth-quarter adjusted profits rose slightly amid a big push to sell its electric vehicles with offers of zero financing and other incentives, but the results still fell short of Wall Street forecasts.

The electric vehicle, battery and robotics company run by Elon Musk said Wednesday that quarterly net income adjusted for one-time items rose 3% to $2.6 billion, or 73 cents a share—less than analysts’ estimate of 77 cents.

Tesla stock initially fell after trading closed Wednesday, then reversed course to rise more than 4% after Musk told analysts on a conference call that the company was on track to offer unsupervised “full self-driving” technology to its customers as a paid service starting in Austin in June.

“It went from a theoretical, ‘We hope to launch something in 2025,’ to a set timeline,” said Morningstar analyst Seth Goldstein. “That’s a big step forward.”

Tesla has been losing market share in several countries as traditional car makers and other EV companies, such as China’s BYD, offer customers alternatives. Its stock has surged nonetheless, rising by more than 50% since President Donald Trump was elected, on investor optimism that Musk’s advisory role in the new administration will help the company.

In its letter to shareholders and on the analyst call, Tesla it was hoping to lift sales by driving the cost of its vehicles down, highlighting that one cost measure fell below $35,000, the lowest in its history. It said production of “more affordable” models are expected to start in the first half of the year, with Musk emphasizing that “maximizing volume” was priority.

But then he quickly pivoted in the conference call to other goals and parts of the business, and the stock started climbing.

“AI and robotics—that will bear immense fruit,” he said, adding “I see a path, I’m not saying it’s an easy path, but I see a path for Tesla being the most valuable company in the world—by far, not even close,” leapfrogging the likes of Apple, Microsoft and Nvidia. Tesla is currently the seventh-most valuable company in the S&P 500 with a market value of $1.25 trillion.

Tesla’s unadjusted profits for October through December period were down dramatically, though the year-earlier period was a poor comparison because the results included a large one-time tax benefit. The company said it made $2.31 billion last quarter, down 71% from the $7.93 billion profit in the same period in 2023.

Revenue rose 2% to $25.7 billion, less than Wall Street’s forecast of $27.1 billion, according to FactSet. Tesla offered a series of incentives during the quarter to drum up demand for its electric vehicles including low-interest loans and lower prices. Tesla’s gross profit margin fell to 16.3% for the quarter, down 1.3 percentage points from a year earlier.

Earlier this month, Tesla said it sold 1.79 million vehicles in 2024, the first drop in more than a dozen years despite offers of 0% financing, free charging and low-priced leases. The fourth quarter showed signs of a rebound, though, with a record 495,570 vehicles sold.

“The bulls got what they wanted, and the bears got data to support them as well,” said Wedbush analyst Dan Ives, a big fan of the stock. “But ultimately what will drive the stock is autonomous driving, and this is the bullish I’ve ever heard Musk.”

For the full year, Tesla posted profits before one-time items of $8.42 billion, down 23% from the year earlier.

Investors are expecting that Musk’s close relationship with Trump will translate into lighter regulation on the car company, fewer investigations and help in speeding the development of autonomous driving.

But the Trump administration has also vowed to cut government incentives to customers to buy EVs and says it will loosen emission standards. The latter especially could hurt Tesla because it has a big business in selling “regulatory credits” to other automakers that fall short of the standards.

The latest financial report showed that in the fourth quarter Tesla sold $692 million in these credits, a spigot of cash that could be turned off if Trump follows through on his vow.

—Bernard Condon, AP Business Writer

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