Tesla (TSLA) reported its fourth-quarter earnings on January 24, 2024, and missed analysts’ expectations. The electric vehicle (EV) maker posted revenue of $17.7 billion, a 65% increase from the previous year, but lower than the estimated $18.2 billion. The diluted earnings per share (EPS) was $2.54, also below the forecast of $2.66. Tesla’s stock price fell 5% in after-hours trading and continued to decline the next day.
Tesla’s CEO Elon Musk joined the earnings call and shared his insights on various topics, such as the impact of high interest rates, his voting control of the company, the development of Tesla’s humanoid robot, and the status of Cybertruck deliveries. Here are the four key takeaways from his remarks.
High Interest Rates Hurt Tesla’s Profit Margins
Musk said that high interest rates contributed to low profit margins for the quarter and will continue to do so if there are no rate cuts. He explained that Tesla had to lower its vehicle prices to remain competitive in the market, but this also reduced its revenue and profitability. He said that “it’s not that people don’t want [to buy Tesla vehicles]” they “simply cannot afford it” in a high-interest-rate environment.
The Federal Reserve signaled at the end of 2023 that it would raise interest rates in 2024 to combat inflation. This could make car loans more expensive and discourage consumers from buying new vehicles. Tesla’s average sale price dropped by 25% in December 2023 compared to a year earlier, according to data from Edmunds.com. Tesla’s operating margin, which measures how efficiently the company generates profit from its revenue, was 14.7% in 2021, the highest among all EV makers, but lower than the 15.4% in 2020.
Musk Wants More Influence Before Advancing Tesla’s Position in AI and Robotics
Musk said he is “aiming for a strong influence, but not control” of Tesla before ramping up its initiatives in artificial intelligence (AI) and robotics. He reiterated his recent statement on X (formerly Twitter), which he owns, that he wants 25% voting control of the company before pursuing his vision of creating an “AI and robotics juggernaut of truly immense capability and power.”
Musk currently owns about 20% of Tesla’s shares, but his voting power is diluted by the presence of other shareholders and advisory firms. He said he is concerned that he could “be voted out by some sort of random shareholder advisory firm” that may not share his long-term goals. He said he needs 25% control to have a “strong influence” but not enough to “control the company even if I go bonkers.”
One of Musk’s ambitious projects is Optimis, Tesla’s humanoid robot that he unveiled in August 2023. He said that Optimis could ship as soon as 2025, and that it would be able to perform tasks that are “unsafe, repetitive, or boring” for humans. He said that Optimis would be “friendly” and “eliminate the need for physical labor for most people.”
Cybertruck Deliveries Delayed Due to Production Issues
Musk said that the issues surrounding Tesla’s Cybertruck deliveries reflect a production, not a demand, problem. He said that Tesla has received over one million reservations for the futuristic pickup truck, which was first announced in November 2019. However, he said that the production of the Cybertruck is “very difficult” and “requires a lot of new technology.”
Musk said that Tesla is still working on the design and engineering of the Cybertruck, and that it expects to start deliveries in late 2023 or early 2024. He said that the Cybertruck will be made at Tesla’s Texas Gigafactory, which is still under construction. He said that Tesla will prioritize the production of the Model Y, its best-selling SUV, at the Texas plant before moving on to the Cybertruck.
Tesla Plans to Expand Its Production and Sales Globally
Musk said that Tesla plans to increase its production capacity and sales in various regions around the world. He said that Tesla aims to grow its output by 50% annually, and that it expects to produce 10 million vehicles per year by 2030. He said that Tesla will focus on improving its manufacturing efficiency and reducing its costs.
Musk said that Tesla is also expanding its presence in new markets, such as India, where it plans to launch its Model 3 sedan in 2024. He said that Tesla is working with the Indian government to ensure that its vehicles are affordable and compliant with the local regulations. He said that Tesla is also exploring the possibility of building a factory in India in the future.
Musk said that Tesla is also ramping up its sales in China, the world’s largest EV market. He said that Tesla sold over 300,000 vehicles in China in 2021, and that it expects to sell more in 2024. He said that Tesla is facing strong competition from local EV makers, such as Nio and Xpeng, but that he is confident that Tesla’s products are superior in terms of quality and performance.