30 January 2025
If you are covering Tesla’s latest financial results, please see the following comment from Mamta Valechha, consumer discretionary analyst at Quilter Cheviot:
"Tesla’s Q4 results painted a bleak picture for its core automotive business, marking its weakest quarter since 2017 and missing expectations across the board. Automotive revenue fell 8% due to lower prices and slowing delivery growth, which put significant pressure on margins. Stripping out regulatory credits, gross margins dropped to just 13.6%, missing expectations by two percentage points.
"Unlike Q3, cost control wasn’t enough to offset the weakness, leading to a 40% drop in operating profit, with margins falling to 6.2%—a level more in line with traditional car manufacturers. Earnings per share (EPS) also appeared better than reality due to mark-to-market gains on digital assets, but the underlying miss was actually around 25%.
"Tesla’s guidance was vague, stating that it expects to return to growth in 2025, but without providing specific targets. This is a departure from previous years, where Tesla offered clearer outlooks, and consensus expectations of low-teens growth will likely need to be revised down. There was also no firm timeline for deliveries of its more affordable car, aside from production beginning in the first half of this year, which suggests it won’t be meaningfully available until late 2025. Unlike previous plans, these models will now be built on existing platforms, which will lead to lower cost reductions.
"Despite the weak quarter, Tesla’s stock actually rose in after-hours trading, driven by Elon Musk’s renewed emphasis on AI and full self-driving (FSD). He highlighted improvements in Tesla’s software, with planned rollouts in Texas and California, though regulatory barriers in Europe and data restrictions in China continue to slow progress. Ultimately, Tesla is still being valued more like a tech company, trading at 120 times earnings, despite the reality of slowing growth."
