Tesla shares fall as Q4 earnings miss, warns production growth rate will be 'significantly lower' from 2023

Tesla ( TSLA ) reported fourth-quarter earnings that beat estimates and issued a pessimistic full-year production forecast, weighing on the stock, though CEO Elon Musk confirmed the company's next-generation vehicle would be coming in the second half of 2025.

For Q4, Tesla reported total revenue of $25.17 billion versus $25.87 billion (estimated), but revenue was up nearly 3% from a year ago. From a profitability standpoint, Tesla reported adjusted EPS of $0.71 vs. $0.73 (estimated) and adjusted net income of $2.486 billion vs. $2.61 billion expected by the Street.

Regarding its full-year production, Tesla said that “the vehicle volume growth rate may be significantly lower than the growth rate achieved in 2023, as our teams work to launch the next generation vehicle at the Gigafactory Texas,” noting that it will not reach the street estimates of 2.19 million for 2024, which would have been a 21% increase over 2023.

However, in its earnings release and later in the earnings call, Tesla mentioned progress on its next-generation platform. “We are focused on bringing the next generation platform to market as quickly as possible, with a plan to begin production at the Gigafactory Texas. This platform will revolutionize how vehicles are manufactured.”

“We've come a long way in developing the next generation of our low-cost car, and we're really excited about this,” Musk said on the earnings call, explaining. “It's a revolutionary manufacturing system, far more advanced than any other system in the world.” The company's current timeline may reach production of this car in the second half of 2025. This reflects what Reuters reported earlier, where Tesla told suppliers that it wants to start production of a new mass-market electric car codenamed “Redwood” in the middle of 2020. 2025.

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Tesla shares fell nearly 8% in pre-market trading Thursday after the report was released.

Tesla's lower profitability is likely due to downward pressure on margins since Tesla began its cost-cutting efforts in late 2022. Tesla reported Q4 gross margin of 17.6% versus 18.1% estimated, a significant decline compared to last year and a sequential decline from the 18.1% estimate achieved. 17.9% in the third quarter.

Addresses such as car rental company Hertz abandons thousands of electric vehiclesTesla's price cuts in China, a two-week production halt in Berlin, and CEO Elon Musk's ill-timed request for more stock also affected Tesla.

Earlier this month, Tesla 484,507 births were reported in the fourth quarter, beating Street estimates of 483,173, according to Bloomberg. The figure marks an all-time record quarter for Tesla, nearly 20,000 units higher than the previous record quarter of 466,000 units delivered in the second quarter of last year.

For the year, Tesla said vehicle deliveries increased 38% year-over-year to 1.81 million and production grew 35% year-over-year to 1.85 million. While the 38% delivery growth rate was below its 50% compound annual growth rate (CAGR) target, Tesla previously said it would not meet that target due to factory closures and improvements that occurred in the third quarter.

Also worth noting are the Cybertruck deliveries. Tesla did not exceed that total in its fourth-quarter delivery update, though the company said the Cybertruck's production ramp will take longer than other models. “[Cybertruck] Musk said on the call, repeating similar comments made last year.

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FILE PHOTO: Tesla's new Cybertruck is displayed at a Tesla store in San Diego, California, US, November 20, 2023. REUTERS/Mike Blake/File Photo

Tesla's new Cybertruck is displayed at a Tesla store in San Diego, California, November 20, 2023. (Mike Blake/Reuters/File Photo) (Reuters/Reuters)

Musk also addressed his comments from last week claiming that he will need to secure greater control over Tesla if the company is to achieve its wide-ranging AI ambitions.

Musk said on the earnings call that his concern, given his current shareholding, would be that he would have “so little influence” in the future that some major shareholder might strip him of his control or make a bad decision.

Elon Musk speaks at a symposium on anti-Semitism, organized by the European Jewish Association, in Krakow, Poland, on January 22, 2024. (Photo by STR/NurPhoto via Getty Images)Elon Musk speaks at a symposium on anti-Semitism, organized by the European Jewish Association, in Krakow, Poland, on January 22, 2024. (Photo by STR/NurPhoto via Getty Images)

Elon Musk speaks at a symposium on anti-Semitism, organized by the European Jewish Association, in Krakow, Poland, on January 22, 2024. (STR/NurPhoto via Getty Images) (Nour Photo via Getty Images)

“I could be voted out by some random shareholder advisory firm,” he said, citing Institutional Shareholder Services (ISS) and Glass Lewis, two major shareholder advisory firms, as examples. “[A] “A lot of activists are infiltrating equity organizations,” Musk said, adding that he's “not looking for additional economics; I just want to be an effective steward of powerful technology.”

Pras Subramanian is a reporter for Yahoo Finance. You can follow it Twitter and on Instagram.

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