Tesla (TSLA) stock saw a 9% drop early Thursday following the company’s announcement of fourth-quarter earnings that missed expectations. The electric car giant posted gross revenue of $25.17 billion in the fourth quarter, slightly below the expected $25.87 billion. Despite a 3% increase in revenue compared to the previous year, Tesla’s adjusted earnings per share (EPS) came in at $0.71, below the $0.73 forecast.
Additionally, Tesla’s full-year production outlook dampened investor enthusiasm, with the company stating that “the vehicle volume growth rate may be noticeably lower than the growth rate achieved in 2023.” The outlook suggests challenges as Tesla teams focus on launching the next-generation vehicle at Gigafactory Texas. This revelation dashes hopes of reaching the Street’s estimated production of 2.19 million vehicles by 2024, representing a 21% increase over 2023.
CEO Elon Musk provided a silver lining by confirming the arrival of the company’s next-generation vehicle in the second half of 2025. During the earnings call, Musk emphasized progress on Tesla’s next-generation manufacturing platform, describing it as a “revolutionary manufacturing system, far more advanced than any other in the world.”
Tesla’s decline in profitability is attributed to pressure on margins resulting from the company’s cost-cutting initiatives initiated in late 2022. Fourth-quarter gross margin of 17.6% fell short of the estimated 18.1%, marking a significant decline from a year ago.
Several factors contributed to Tesla’s recent challenges, including Hertz’s divestment of thousands of electric vehicles, price cuts in China, the halting of production in Berlin, and Elon Musk’s ill-timed call to increase inventories. Despite these obstacles, Tesla posted a record 484,507 deliveries in the fourth quarter, surpassing Street estimates.
Looking ahead, Cybertruck deliveries remain in demand, although Tesla did not provide specific numbers in its fourth-quarter delivery update. Elon Musk expressed optimism about the popularity of the Cybertruck and addressed concerns about its influence on Tesla’s future, citing potential challenges from shareholder advisory firms such as Institutional Shareholder Services (ISS) and Glass Lewis.
In short, Tesla’s stock decline is tied to fourth-quarter earnings estimates, along with a cautious full-year production outlook. However, the company remains committed to innovation, with the next generation vehicle planned for 2025 and continued progress on an innovative manufacturing platform.
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