Tesla Endures Tough 2024, But Musk Sees UpsideTesla Endures Tough 2024, But Musk Sees Upside

Tesla expects to slash production in the first quarter as it readies the updated version of its best-selling Model Y at key plants in the U.S., China and Europe and prepares for the initial launch of its robotaxi business in Austin, TX.

CEO Elon Musk says Tesla also will launch a low-cost model this year, but he offers few details about the new vehicle.

The revamped Model Y, which will enter production later this year, is seen as critical to the meeting the automaker’s global sales targets in 2025, during which Musk foresees “constraints” challenging Tesla. Batteries or battery cells are in short supply for Tesla’s electric vehicles and for its energy-storage business, which grew 50% in 2024 and represents a significant piece of the company’s revenue and profits, surpassing even its growing charger operations.

“From a dollar-for-dollar basis, we believe we have the most compelling lineup today compared to the industry, and it will continue to get better from here,” Musk says during a conference call with investors and analysts to discuss fourth-quarter and full-year 2024 financial results. “As always, all our products come with the best software in the industry (and) autonomy features and (will be) capable of full autonomy in the future. And despite the premium experience, the total cost of ownership is close to mass market.

“Our current constraint is battery packs this year, but we’re working on addressing that constraint,” says Musk, whose company depends on Panasonic and CATL, the Chinese battery-making giant, for battery cells.

Musk says Tesla’s plans for new vehicles, particularly more-affordable models, remain on track for the start of production in first-half 2025.

The new vehicles will utilize aspects of the next-generation platform as well as parts of current platforms and will be produced on the same manufacturing lines as the current vehicle lineup, Musk says, resulting in less cost reduction than previously expected.

The Cybercab robotaxi (pictured, below) is scheduled for volume production starting in 2026, he adds.

“We already have Tesla operating autonomously unsupervised Full Self Driving at the company’s factory in Fremont (CA), and we’ll soon be doing that at our factory in Texas,” the CEO says. “The cars are actually programmed with what lane they need to park in to be picked up for delivery. And then doing this reliably every day, thousands of times a day. It’s pretty cool.

Energy storage is “super important,” Musk says, adding energy storage can stretch the output of the nation’s grid dramatically. “This will drive the demand (for) stationary battery packs.”

Managing the growth of Tesla’s energy-storage business, which will be bolstered by production from a new plant in Shanghai, will require the company to balance that operation’s needs with that of its mobility business.  

Says Musk: “There is a challenge here where we must be careful that we’re not robbing from one pocket to take to another pocket, because for a given gigawatt-hours per year of the cell output, we have to say, ‘Does it go into stationary applications or mobile applications?’ It can’t go into both. So, we have to make that trade-off.”

Musk spent a large part of the call touting Tesla’s robot business, which he says is critical to the company’s future and could make Tesla the most valuable company in the world, predicting sales could reach $10 trillion annually. According to Forbes, Tesla currently ranks eighth worldwide with $1.274 trillion in market capitalization, roughly one-third of No.1 Apple.

Tesla revenues totaled $25.7 billion last quarter, with adjusted earnings per share at $0.73, both short of consensus analyst estimates of $27.3 billion and $0.77, respectively, according to FactSet.

The final earnings release of 2024 reflects another difficult year for Tesla’s bottom line, as its full-year net income came in at $8.4 billion, a 23% decrease from 2023 and a 40% decline from 2022’s record $14.1 billion profit, though its full-year revenue rose to $97.7 billion, a 1% improvement from 2023.

Tesla’s financial report shows the profit margin on its BEV business dropped to a modest 6.2%. Tesla also took in $2.7 billion by selling “regulatory credits” to other automakers.

While Musk, as the head of newly created Department of Government Efficiency, has been deeply – and often controversially – involved in the launch of President Trump’s second administration this month, his views on the development of sustainable energy vary significantly from those of Trump, who has vowed to boost the use of oil.“I think that sustainable transport is inevitable,” Musk says. “I’m highly confident that all transport will be autonomous (and) electric, including aircraft, and that it simply can’t be stopped any more than one could have stopped the advent of the…internal-combustion engine. Like, even if you’ve been the biggest advocate of the horse on Earth.”