TESLA said it was on track to roll out new, cheaper electric vehicle (EV) models in the first half of 2025, as its quarterly profit and revenue fell short of Wall Street expectations on Wednesday (Jan 29) due to discounts and financing offers.
Tesla’s market value has soared with the election of US President Donald Trump, who is a close ally of CEO Elon Musk, but the electric car company posted a dip in deliveries last year, raising pressure for it to roll out a new, lower-priced model, as well as the autonomous vehicles and software that Musk says underpin its financial future.
Shares rose 2.7 per cent as Tesla said it was cutting costs and working on the new vehicles.
“Affordability remains top of mind for customers, and we continue to review every aspect of our cost of goods sold,” the company said in its earnings report. It added that those costs had hit their lowest level ever in the fourth quarter, at less than US$35,000, driven by lower costs of raw materials.
Tesla has a history of being late to deliver products and Thomas Martin, senior portfolio manager at Tesla shareholder Globalt Investments, said Tesla’s recommitment to delivering the new vehicles in the first half of the year was unusual and positive.
“They have been able to execute on the cost side and get that down. And so their ability to do that in the fourth quarter, definitely cushioned the blow,” he added.
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Tesla also signalled progress on its autonomous driving software. The current version is known as full self-driving, or FSD, and Tesla plans a self-driving Cybercab. Commercial-scale production of that robotaxi was planned for 2026 at its Texas factory, Tesla said. “People are reading into the results that FSD and robotaxi are potentially on the cards in the next couple of years,” said Will Rhind, CEO of global ETF issuer GraniteShares.
Tesla has used cheap financing to pump up EV demand, a strategy analysts had predicted would erode automotive profit margins in future quarters as the company absorbs the impact of high interest rates.
Tesla’s fourth-quarter profit margin from vehicle sales, excluding regulatory credits, fell to 13.59 per cent from 17.05 per cent in the prior three-month period, according to Reuters calculations. Wall Street had expected the figure to be 16.2 per cent, according to 23 analysts polled by Visible Alpha.
Revenue was US$25.71 billion for the October to December quarter, compared with estimates of US$27.27 billion, according to estimates compiled by LSEG.
The EV pioneer’s annual deliveries dropped for the first time last year, due to higher borrowing costs and intense competition.
Rivals such as China’s BYD, as well as European manufacturers BMW and Volkswagen have launched new cheaper models to capture market share.
The company has not revealed details regarding pricing, features and how its new models would be different from current offerings. Tesla said it expected the vehicle business to return to growth this year, after a small drop in 2024. Musk had said late last year he expected vehicle sales to grow 20 to 30 per cent in 2025, a forecast the company did not repeat in its results announcement.
The company’s gross profit margin stood at 16.3 per cent in the October to December period, lower than estimates of 19.03 per cent, according to 20 analysts polled by LSEG. Tesla posted a profit margin of 19.8 per cent in the third quarter. REUTERS
