Tesla shares miss Q4 earnings, warns production growth rate 'significantly slower' than 2023

Tesla ( TSLA ) reported Q4 earnings that missed estimates and released a full-year production outlook that weighed on the stock, although CEO Elon Musk confirmed the company's next-gen vehicle will arrive in the second half of 2025.

For the fourth quarter, Tesla reported top-line revenue of $25.17 billion versus $25.87 billion (estimate), though revenue was up roughly 3% from a year ago. From a profitability standpoint, Tesla reported adjusted EPS of $0.71 versus $0.73 (estimated) and adjusted net income of $2.486 billion versus $2.61 billion, which the Street expects.

As for its full-year production, Tesla indicated that its “vehicle volume growth rate may be significantly lower than the growth rate achieved in 2023 as our teams work on introducing the next-generation vehicle at the Gigafactory in Texas.” Street estimates for 2024 will not reach 2.19 million, which would have been 21% higher than in 2023.

However, in its earnings release and subsequent earnings call, Tesla noted progress on its next-generation platform. “With plans to begin production at the Gigafactory Texas, we are focused on bringing the next-generation platform to market as quickly as we can. This platform will revolutionize vehicle manufacturing.”

“We're very close to our next-gen low-cost vehicle; we're very excited about it. It's a revolutionary manufacturing system that's far more advanced than any other in the world,” Musk clarified on the earnings call. The company's current schedule has the vehicle hitting production in the second half of 2025. This echoes what Reuters previously reported that Tesla has told suppliers it wants to start production of a new mass-market EV codenamed “Redwood” in mid-2025.

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Tesla shares fell nearly 8% in premarket trading on Thursday after the report.

The pressure on Tesla's profits could be due to the fact that Tesla begins its cost-cutting efforts in late 2022. Tesla reported an estimated Q4 gross margin of 17.6% vs 18.1%, a big drop from a year ago and a continued decline to 17.9% in Q3.

Headlines like the rental car company Hertz is churning out thousands of EVsTesla's price cuts in China, a two-week production shutdown in Berlin, and CEO Elon Musk's unnecessary deadline for a higher stake have also weighed on Tesla.

Earlier this month, Tesla 484,507 births were reported In Q4, it beat Street estimates of 483,173 per Bloomberg. That figure marks an all-time record quarter for Tesla, nearly 20,000 units higher than the previous quarter's 466,000 units delivered in Q2 of last year.

For the year, Tesla reported vehicle deliveries up 38% year-over-year to 1.81 million, and production up 35% year-over-year to 1.85 million. While its 38% delivery growth rate fell short of its 50% compound annual growth rate (CAGR) target, Tesla previously said it would not reach that target due to factory shutdowns and upgrades in Q3.

Cyberdrug deliveries are also notable. Tesla did not break out this total in its Q4 delivery update, although the company said the Cybertruck production curve will take longer than other models. “[Cybertruck] There's no need,” Musk said on the call, repeating the same comments he made last year.

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

Tesla's new Cybertruck is on display at the Tesla Store in San Diego, California on November 20, 2023. (Mike Blake/REUTERS/File Photo) (Reuters / Reuters)

Musk addressed his comments last week, saying that if the company is going to meet its broader AI ambitions, it needs to take more control of Tesla.

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Musk said on the earnings call that he was concerned that he would have “very little leverage” with his current stake and that some key shareholders could lose control or make bad decisions in the future.

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

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

“I could vote for some random shareholder advisory firm,” he said, citing Institutional Stakeholder Services (ISS) and Class Lewis, two large shareholder proxy advisory firms, as examples. “[A] A lot of activists are infiltrating shareholder ownership systems,” Musk said, adding that he's “not looking for incremental economics; I want to be an efficient steward of powerful technology.

Press Subramanian is a Yahoo Finance reporter. You can follow him Twitter And on Instagram.

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