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Jan. 30, 2025 Tesla CEO Elon Musk promised that Tesla will launch an unsupervised self-driving robotaxi in Austin, Texas, by June 2025, while also beginning production of Tesla's cheaper electric vehicles.
Full Self-Driving (FSD) systems on Tesla's robotaxi are capable of many impressive maneuvers, it can make a car move forward, reversing, braking and even accelerating but is still not perfect. Human supervisor is still necessary in current Tesla's FSD system.
The FSD system can't handle unexpected situations like construction zones, unusual traffic situations or unpredictable behavior from other drivers and strutters. That's why many regions still require human driver to supervise FSD-installed cars and enforce regulations that do not permit fully unsupervised autonomous driving as the system is still evolving.
For the Q4 2024 financial results, the revenue increased 2% over the past year to $2.57 billion thanks to regulatory credit, which will be gone under Trump's EV mandate revocation, Energy Generation & Storage andServices also add up the growth in revenue.
Tesla's recent pricing adjustment and financing options for its S3XY vehicles have reduced their average selling price but without these Tesla would have missed out on many sales. And Tesla chose to apply the pricing adjustments and provide financing options that lowering the vehicle price to gain the sales volume. Tesla's gross margin fell to 16.3% for lowering their price.
The pricing strategy is important as Tesla is reported having intense competition from China automaker BYD and Europe automaker like BMW and Volkswagen. The competition is believed to be the first cause to its first annual decline in vehicle deliveries, with 1.79 million vehicles sold in 2024, down from 1.81 million in 2023.
The operating income declines 23% year over year and its adjusted net income decreased by 71% to $2.3 billion or EPS $0.73 primarily due to lower operating expenses from AI and research and developments activities. The cash and cash equivalent at the end of quarter was $3.36 billion with free cash flow of $2 billion.
Tesla is now facing multiple challenges. Internally it still needs to improve its FSD system to make it fully unsupervised before June 2025, produce more affordable cars to meet the demand and compete in Europe, and making more R&D spending while offering pricing adjustment and financing options.
And externally, Trump's EV mandate elimination repeals a $7,500 tax credit for new EV purchases and that will affect Tesla's sales volume which currently enjoy the EV mandate from former administration. Not to mention the competition from other automakers like BYD, BMW and so forth.