Tesla's automotive profits drop amid discount sales and AI stock surge
Kumar Shivam | Jan 31, 2025, 23:59 IST
( Image credit : AP )
Tesla’s automotive profits dropped in Q4, hitting a five-year low due to discounted inventory sales. The company didn’t reaffirm its 20%-30% sales growth target. Despite this, stock prices rose, driven by Musk’s focus on AI and robotics, including the Optimus robot. Tesla’s financial health weakened, with a low gross margin and a $600 million windfall boosting net income.
Tesla’s profits from its automotive division fell in the fourth quarter as the company was forced to sell excess inventory at discounted prices, according to a report. This marked the lowest level in five years.
Additionally, the company did not reaffirm its previous guidance of 20% to 30% vehicle sales growth for the year, Fortune reported.
Despite struggles in the car business, Tesla’s stock has risen, driven by Elon Musk’s bold bets on AI and robotics.
Musk has shifted focus to plans for a nationwide rollout of Tesla’s robotaxi service this year and the development of the Optimus humanoid robot. He projected that Optimus production could reach 10,000 units in 2024 and grow fivefold annually, potentially reaching 100 million units in the future.
Tesla CFO Vaibhav Taneja warned that profitability would take another hit starting in February, as the company begins simultaneous production of the refreshed Model Y—codenamed Juniper—across three continents, Fortune reported.
Tesla’s financial health is often measured by its automotive gross margin, excluding revenue from CO2 credit sales to legacy automakers. This metric dropped to 13.6%—its lowest in five years—down from the 20% to 30% range seen after the Model Y’s launch in 2020.
Additionally, Tesla’s net income would have been significantly lower if not for a $600 million boost, Fortune noted. Under new accounting rules, the company was able to revalue its Bitcoin holdings to reflect current market prices.
Additionally, the company did not reaffirm its previous guidance of 20% to 30% vehicle sales growth for the year, Fortune reported.
Stock Gains on AI Hype
Musk has shifted focus to plans for a nationwide rollout of Tesla’s robotaxi service this year and the development of the Optimus humanoid robot. He projected that Optimus production could reach 10,000 units in 2024 and grow fivefold annually, potentially reaching 100 million units in the future.
Challenges Ahead
Tesla’s financial health is often measured by its automotive gross margin, excluding revenue from CO2 credit sales to legacy automakers. This metric dropped to 13.6%—its lowest in five years—down from the 20% to 30% range seen after the Model Y’s launch in 2020.
Additionally, Tesla’s net income would have been significantly lower if not for a $600 million boost, Fortune noted. Under new accounting rules, the company was able to revalue its Bitcoin holdings to reflect current market prices.