Tesla’s annual profits have plummeted to their lowest point since the pandemic, as the electric vehicle giant lost its crown as the world’s biggest EV maker to a Chinese rival and faced significant sales boycotts.
The company, led by Elon Musk, reported on Wednesday that its net income for last year dropped by 46 per cent to $3.8bn (£3bn). This marks the second consecutive year of steep declines, occurring despite the introduction of more affordable models and Mr Musk’s pledge to remain singularly focused on the business following his foray into US politics.
Despite these financial setbacks, Tesla investors appear to have maintained their confidence in Mr Musk, with the company’s stock rising by 9 per cent over the past year. Mr Musk has been urging shareholders to shift their attention from car sales to what he envisions as a groundbreaking future of robotaxis, ferrying millions in driverless vehicles, and robots tending to plants and elderly relatives. Investors and analysts anticipate further details on these ambitious plans during a conference call later today.
For the fourth quarter of last year, Tesla’s net income also saw a sharp decline, falling 61 per cent to $840m, or 24 cents per share. Excluding one-off charges, net income reached 50 cents per share, surpassing analysts’ forecasts of 45 cents. Sam Abuelsamid, an analyst at Telemetry, commented: “They’ve got aging product that is less and less competitive as others manufacturers come out with new models, then there is the general brand destruction. Musk‘s involvement in politics has turned off customers.”
One positive note for the company was an improvement in its gross profit margins, which rose to 20 per cent last quarter from 16 per cent a year ago. The stock’s resilience is partly attributed to Mr Musk’s renewed focus on Tesla after spending the early part of last year heading a government cost-cutting team in Washington. However, it remains uncertain if his attention will remain undivided in the new year, with plans to take his rocket company SpaceX public, potentially in June. This is widely expected to be a blockbuster IPO that could make him the world’s first trillionaire, but also risks distracting him.
The latest figures represent a significant setback for a company that had promised so much just a year ago. Following the election of President Donald Trump, investors had driven up the stock, betting that Mr Musk’s advisory role in the new administration would benefit the company. Instead, it backfired, with customers angered by his work for President Donald Trump and his right-wing political stances boycotting the brand. Mr Musk had also pledged a year ago that European regulators would approve Tesla’s partial self-driving software within three months, a move that could have significantly boosted sales there, but this approval did not materialise.
Investors were also enthusiastic about Tesla’s robotaxi service, which promised rides without human drivers. Initially, these services required supervisors to be present to take control if necessary, though progress is being made. Tesla recently announced the removal of these safety drivers in Austin, where the service launched in June, and has vowed aggressive expansion into other cities in the coming year. For some on Wall Street, this development is enough to fuel excitement and continue pushing the stock upwards. Dan Ives of Wedbush Securities, a prominent bullish analyst, predicts robotaxis will operate in over 30 cities by the end of this year, with Tesla capturing 70 per cent of the global self-driving car market within a decade.
The company’s energy storage business also posted strong numbers last quarter, with revenues surging 25 per cent to $3.8bn. Tesla is benefiting from massive demand as data centres, which consume vast amounts of energy, are being built across the US.
