For the fourth time in a row, Tesla's (TSLA +0.97%) stock price dove following its earnings report release.
Share prices of the leading electric vehicle (EV) maker finished down 12.1% on Thursday after the company missed estimates on the top and bottom lines and offered a weak production forecast for 2024. CEO Elon Musk said the company was between two major growth waves, indicating that investors would have to be patient until new products help reaccelerate Tesla's growth rate.
Tesla's automotive revenue growth slowed to just 1% year over year, reaching $21.6 billion, and overall revenue grew just 3% to $25.2 billion. Additionally, profits continued to tumble, with gross margin slipping from 23.8% in the quarter a year ago to 17.6% in Q4 2023, and operating income fell 47% to $2.06 billion.
While Tesla's growth has moderated significantly, the stock still retains a significant premium over other automakers. This is primarily due to expectations of coming disruptive technologies like full self-driving, its Optimus autonomous humanoid robot, and new car models, including a lower-priced offering and even "robotaxi," a purely autonomous vehicle without a steering wheel.
Musk made predictions about two of those initiatives, and either could be game changers for Tesla. Here's what he had to say.
Image source: Tesla.
1. Full self-driving could be coming this year
Full self-driving has become something of a white whale for Tesla, as the company has been touting the technology for years, but it has yet to be fully deployed, though a beta version is available.
For many investors, full self-driving, or FSD, is the technology that will make Tesla a truly transformative company. Ark Invest's Cathie Wood envisions robotaxis with FSD technology contributing a majority of the company's profits as soon as 2030, just six years away.
It's unclear when Tesla will offer full self-driving, as there are technological, reputational, and regulatory hurdles. However, according to Musk's comments on the earnings call, it could be coming sooner than most investors think.
In response to a question about other carmakers licensing FSD technology, Musk said, "I really think lots of car companies should be asking for FSD licenses. We've had some tentative conversations, but I think they don't believe it's real quite yet. I think that will become obvious probably this year."
It's not clear exactly what Musk is referring to when he says "obvious," but it sounds like the company is on the verge of making it clear that FSD is real and functional. He also said he was interested in hosting another AI day later this year, so investors should expect to learn more about the timeline for FSD, and could even see a release sometime in 2024.
NASDAQ: TSLA
Key Data Points
2. Tesla's next-gen vehicle is coming in 2025
Tesla has also been teasing a mass-market vehicle for years as well, and investors finally got some information regarding that launch.
In response to a question about moving production of the next-generation vehicle platform to Austin, Texas, Musk said, "Our current schedule says that we will start production toward the end of 2025, so sometime in the second half. That's just what our current schedule says." Musk also acknowledged that he's "often optimistic regarding time," a tongue-in-cheek reference to his earlier delivery promises that came up short. For example, the Cybertruck was originally slated for delivery in 2021, but it finally rolled out late last year.
Musk has said time and again that competing on price is key to the company's long-term growth and market share gains, and introducing a mass-market vehicle that could be priced around $25,000 is a cornerstone of that strategy. The Tesla chief also added, "We're very far along on our next-generation low-cost vehicle," and he called the manufacturing system involved "revolutionary."
An affordable Tesla vehicle that could compete with the likes of a Toyota Corolla or Honda Civic could be a game changer for the company, especially if it performs significantly better than similarly priced vehicles.
What it means to Tesla investors
Tesla did not give guidance for 2024, but it seems likely to be a lost year for the company, barring a major announcement with full self-driving. Still, the stock's recent pullback seems to adequately reflect the business's near-term weakness.
If the company can deliver on FSD and the next-gen vehicle, the stock should be a winner over the long term. Of course, Musk's comments on the timeline aren't a guarantee by any means, but the potential of another disruption from Tesla should help put a floor on the EV stock, barring further declines in its profit margins or negative revenue growth.
