Musk hits new levels of hype as Tesla earnings fall short

Tesla CEO Elon Musk ratcheted the hyperbole to new levels on the company’s latest earnings call, talking up the earnings potential of new projects like the Optimus robot and Cybercab autonomous car, even as earnings on the core automotive business delivered a “significant” miss on analysts’ expectations.

Tesla’s quarterly discussions with business analysts have rarely followed the patten of other listed automotive companies’, with Musk preferring to make often-unfounded predictions about future launches and milestones rather than give colour to the current balance-sheet numbers.

The policy has served him well, with investors taking his word for it and pushing Tesla to a $1.28 trillion (£1.0tn) valuation.

But the call on 29 January pushed Musk’s fanciful depictions of vast future profit pools generated by Tesla-engineered creations to new heights.

He predicted the humanoid Optimus “will be overwhelmingly the value of the company” and stated revenue from sales could “north of $10 trillion”.

To put that into context, Tesla’s revenue from selling electric cars in 2024 was $77 billion (£62bn), down 6% on the year before.

Musk also announced the launch of “unsupervised FSD”. Tesla’s current Full Self Driving system has always required the driver to pay attention, but Musk promised this system would be able take control in California and “many regions of the US” by the end of this year. 

A robotaxi running the system would put onto a ride-hailing fleet in the Texas city of Austin in June, he said.

The claims then escalated from there: “I expect us to be operating unsupervised activity with our internal fleet in several cities by the end of the year. Then it’s probably next year when people are able to add or subtract their car from the fleet.”

This is a huge step, given that it shifts the burden of responsibility for any crashes from the driver onto Tesla, which still relies on cameras and its own AI-informed software stack to locate and direct the car. 

The company refuses to introduce redundancy in the form of other sensors such as lidar (essentially 3D cameras) or even radar – technology that everyone else working in the space says is essential for full autonomy, even for brief periods on the highway.

Musk may feel he has protection from official National Highway Traffic Safety Administration (NHTSA) guidelines on self-driving vehicles, thanks to his relationship with new US president Donald Trump (not mentioned on the call), but he won’t from the insurance industry.

Oddly, perhaps, Musk didn’t push autonomous vehicles as Tesla’s big earnings-generator, as he has done in the past. In 2023, for example, he declared “the value of the company is primarily on the basis of autonomy” – something he now says about Optimus. 

Musk then moved onto the Semi electric lorry, production of which is “ramping up” in 2026. That too will be become autonomous.

“That’s probably a $10 billion-a-year thing. That’s $1 billion a month at some point probably,” Musk predicted, before somewhat strangely dismissing that as chump change. “These days, does several billion a year matter?” 

The unremarkable financial performance of Tesla in reality was largely glossed over. The company’s operating margin in Q4 of 2024 dropped to 6.2% from 10.8% in Q3 as income fell 23% to $1.58bn compared with the same quarter the year before. 

CFO Vaibhav Taneja blamed a lower average selling price of Tesla’s cars on discounting. The end-of-year push to sell was seen strongly in the UK, where the Model Y was available to lease for as low as £349 a month (including VAT) in a December deal that extended into January ahead of the arrival of the facelifted car.

Overall, Tesla delivered 1,789,226 cars in 2024, down 1% on the year before and arresting a remarkable growth run from just under 500,000 in 2020.

The bulk remain the Model Y and Model 3, with the Model S, Model X and Cybertruck clocking just 85,133 sales in the year. 

The Cybertruck didn’t warrant a single mention in the earnings call, and Tesla’s refusal to separate out its numbers looks to be out of sheer embarrassment more than anything else.

The refreshed Model Y arriving in showrooms soon is likely to improve Tesla’s sales, given its best-selling status in the brand’s line-up.

However, Tesla’s 2025 growth guidance was muted partly as the result of the company’s need to retool plants in the US, China and Germany to shift to building the new model.

Tesla claims the Model Y is still the world’s best-selling car, even if it was pushed down from first to fourth in Europe in 2024 according to figures published by Automotive News Europe.

Tesla’s main engine for future vehicle sales growth was to be the ‘Model 2‘, which has now been abandoned for what’s being called “a more affordable model“, expected to be variant of the Model 3 or Model Y.

This is on track for launch “in the first half of 2025”, Taneja said on the call without giving detail. It’s perhaps telling that Musk didn’t mention it at all.

Musk also has to overcome growing dislike among potential Tesla buyers of his hobby of boosting right-wing politicians.

Tesla claimed the cost of goods sold for each car was now down below $35,000, “driven largely by raw material cost improvement”. That will boost the financials of the new cheaper model – but given that battery costs are coming down across the board, it also helps rivals.

Tesla’s other moats are gradually being filled in, too. The generous regulatory credit money it takes from car makers behind on the shift to EVs is likely to come to an end in the US at least as Trump looks to water down emissions-reduction schemes. 

In Q4 of 2024, Tesla received $447m from sales of credits. Some of that might have come from JLR, which said it paid £30m to buy credits to cover its shortfall in the US. 

However, JLR’s CFO said on the company’s most recent earnings call that he expected that bill to largely disappear next year, thanks to moves by Trump. 

Tesla sales meanwhile could be impacted by Trump’s dislike of EVs in general. Without mentioning Trump by name, Musk downplayed this on the call in an answer to a question from an analyst: “You can’t stop the advent of electric cars; it’s going to happen.” 

Musk’s trick over the years has been to qualify his wildest claims in such a way that deflects attention from the SEC financial authorities but also inspires his followers into believing them to be real. On Wednesday, he seemed to understand he was reaching the limits of believability, even as he doubled down.

“Obviously I’m making these revenue predictions that sound absolutely insane. I realise that,” he said. “But I think they will prove to be accurate. Yeah.”