Tesla faces an inflection point, where it must deal with both internal challenges and market pressures as sales of its electric vehicles (EVs) slow. Despite its ambitions for autonomous driving technology, the company’s latest earnings report for the fourth quarter of 2024 highlights a significant drop in profitability.
Profits decline amid market challenges
In the fourth quarter of 2024, Tesla reported a 70% decline in net income compared to the same period in 2023. The drop was largely due to the absence of a non-cash tax benefit of $5.9 billion from the previous year. This left Tesla with a net profit of $2.3 billion on $25.7 billion in revenue, a modest 2% year-over-year increase but below market expectations.
The report also included major announcements, including Tesla’s plans to launch its “Cybercab” Robotaxi in 2025 and begin piloting its Optimus humanoid robot. The company remains focused on full self-driving (FSD) technology and intends to introduce an unattended FSD option once safety parameters are met.
Tesla expects Cybercab production to ramp up in 2026, using its “boxless” manufacturing approach to streamline production and reduce costs.
Beyond EVs: Tesla’s Energy and AI Ambitions
As competition in the EV market intensifies, Tesla is stepping up its efforts in artificial intelligence (AI), energy storage, and autonomous driving.
Chief executive Elon Musk told investors that Tesla has the potential to be more valuable than the top five companies combined, largely due to advances in autonomous vehicles and robotics.
Despite a declining operating margin (from 8.2% to 6.2% year-over-year, hurt by price cuts for the Model S, 3, X and Y), Tesla remains committed to making its cars more affordable. However, investors remain cautious about whether this strategy is sustainable in the long term.
Energy business emerges as key driver of growth
While Tesla’s electric vehicle division faces hurdles, its energy generation and storage business is proving to be a major profit center. The company deployed a record 11 GWh of energy storage in the fourth quarter, driven by demand for Megapack and Powerwall 3.
Tesla also expanded its Supercharger network, adding more than 10,000 new charging stations in 2024, a 19% increase from the previous year. More third-party automakers are now using Tesla’s charging infrastructure, further boosting its energy business.
Looking ahead, Tesla expects its energy storage deployments to grow at least 50% in 2025, making this division a critical part of its long-term strategy.
Tesla’s future: software, AI and robotaxis
Musk emphasized that Tesla’s profitability will increasingly rely on software-driven services, rather than just selling cars.
“Very few people understand the value of Full Self-Driving (FSD) and our ability to monetize the fleet,” Musk stated. He noted that autonomous vehicles could be used much more efficiently than regular passenger cars, which typically sit idle for most of the week.
Tesla’s FSD technology has already covered more than three billion miles, and the latest V13 update offers improved real-world driving, automatic parking, and reversing. In 2025, Tesla plans to expand its supervised FSD program to Europe and China, with the goal of launching a completely unsupervised version in select U.S. markets later this year.
If Tesla can successfully introduce fully autonomous vehicles, it could revolutionize industries beyond car manufacturing, including ride-sharing services, logistics, and public transportation. However, regulatory challenges and public acceptance of self-driving technology remain key hurdles.
What’s next for Tesla?
As Tesla moves forward, its success will depend on how well it can balance affordability, innovation, and profitability. While EV sales are slowing, the company is betting big on the