Despite reporting record vehicle and battery sales, Tesla's latest earnings report reveals a concerning financial picture. The company missed earnings estimates and relied heavily on one-time gains to inflate its results. Core automotive margins are shrinking due to falling prices, persistent production costs, and intense competition.
Tesla 's latest earnings report paints a concerning picture despite record vehicle and battery sales. The company missed fourth-quarter earnings estimates, relying heavily on non-core income streams to prop up its financial performance. A significant portion of Tesla 's earnings came from greenhouse gas credit sales and an accounting change related to its Bitcoin holdings, totaling $1.5 billion – half of its total earnings for the quarter after tax adjustments.
This reliance on one-time gains raises questions about the sustainability of Tesla's financial model.Beyond the questionable earnings quality, Tesla's core automotive business is facing challenges. The automotive margin, excluding emissions credit sales, reached its lowest point since 2018 at 13.6%. Average revenue per vehicle sold, excluding leases and credits, also dropped below $40,000, while the gross margin on this basis slumped to approximately $5,100, again the lowest since 2018. Tesla acknowledged a reduction in its average vehicle production cost to under $35,000, a record low. However, this decline is occurring at a slow pace, averaging less than 2% per quarter over the past two years. This makes Tesla's margins vulnerable in a price war, which is currently unfolding in the electric vehicle market due to slowing sales growth in the United States and intense competition in China. Tesla's aging vehicle lineup further exacerbates the issue, leading to falling prices and persistent production costs, resulting in significantly lower margins. Despite a 36% increase in vehicle sales and battery capacity compared to two years ago, Tesla's operating profit has roughly halved. These results are particularly disappointing considering Tesla's previous earnings call, where CEO Elon Musk emphasized strong fourth-quarter vehicle sales and projected a 20-30% growth in 2025. This optimistic outlook drove a significant surge in Tesla's stock price. However, the company's fourth-quarter sales failed to meet these projections, and the 2025 growth target was omitted from the latest earnings report. Musk, despite the underwhelming financial performance, remained focused on promoting Tesla's ambitious projects during the earnings call. He stressed the advancements in self-driving technology, announcing a geofenced robotaxi service in Austin in June, although this target had been previously announced. He also expressed confidence in deploying unsupervised full self-driving capabilities in California and other regions. Musk also highlighted the progress of Optimus, Tesla's humanoid robot project, emphasizing its importance in Tesla's future. He painted a picture of 2025 as a pivotal year for Tesla, potentially surpassing the combined market value of the next five companies. The call concluded with Musk engaging in a series of personal attacks against the media, criticizing Europe's regulatory environment, and advocating for a revival of manufacturing in the United States. These pronouncements, coupled with the celebratory tone despite the disappointing financial results, suggest a growing disconnect between Tesla's financial performance and its public image
TESLA AUTO INDUSTRY ELECTRIC VEHICLES EARNINGS FINANCIAL PERFORMANCE COMPETITION ROBOTAXI AI OPTIMUS
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