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Electric Power, Energy Transition, Renewables
January 30, 2025
By Daniel Weeks and Garrett Hering
HIGHLIGHTS
Energy storage business faces supply challenge
Tariffs would 'very likely' impact business: CFO
Tesla is on track to start making more affordable electric vehicles in the first half of 2025 in a bid to return its core EV business to growth following a stagnant year, while its energy storage arm continues to surge.
The previously announced line of new EV models will enable volume growth "in a more [capital expenditure] efficient manner during uncertain times," the company said in a Jan. 29 shareholder presentation. The new generation of cheaper models, to be made on existing manufacturing lines, will result in "less cost reduction than previously expected," Tesla added.
Tesla experienced a 1% decline in EV deliveries in 2024 and a 6% drop in total automotive revenues, which was partly offset by strong growth in its energy business. It did not estimate overall growth this year.
"The rate of growth will depend on a variety of factors, including the rate of acceleration of our autonomy efforts, production ramp at our factories and the broader macroeconomic environment," the company said. Improvements in raw material costs helped bring Tesla's vehicles to the "lowest ever" cost of goods sold in the fourth quarter of 2024, it added.
This year is likely to pose new cost challenges for EVs in the US, however, as the Trump administration moves to roll back federal support for electric vehicles and infrastructure.
President Donald Trump — who has welcomed Tesla CEO Elon Musk as a key administration adviser — already paused some federal spending on EV charging stations and has signaled his intent to walk back a $7,500 consumer EV tax credit.
"While it is likely that Trump's plans will be challenged in some form, removing this tax credit would further the cost parity between EVs and internal combustion engine cars, making electric vehicles less attainable to lower-income households," S&P Global Commodity Insights analysts said in a Jan. 29 EV Essentials report.
Tesla's earnings presentation mentions the tax credit, saying the company expects its Cybertruck to be eligible for the tax credit this year, "helping to improve affordability and access." The Model Y prices listed in the earnings deck also assume a claimed $7,500 tax credit.
When asked on Tesla's fourth-quarter earnings call about the best policy for supporting sustainable transportation in the US considering Trump's actions, Musk said EV adoption is "inevitable."
Tesla plans to launch unsupervised, full self-driving by the end of this year, with an initial limited rollout expected in June. Unsupervised full self-driving has been delayed multiple times in the past.
The electric-carmaker's energy storage deployments are set for another year of strong growth in 2025, although both its utility-scale Megapack and home storage Powerwall businesses are constrained by supply of battery packs, Tesla CFO Vaibhav Taneja said on the call.
"While quarterly deployments will likely continue to fluctuate sequentially, we expect at least 50% growth in deployments year over year in 2025," Taneja said.
Tesla deployed a record 11 GWh in the fourth quarter of 2024, more than tripling from a year ago. Full-year volumes totaled 31.4 GWh in 2024, approximately doubling from 2023.
The energy business, which also includes rooftop solar, notched its "highest-ever gross profit generation," Tesla said in its shareholder presentation.
Tesla's fourth-quarter energy generation and storage revenues jumped 113% from a year ago to $3.06 billion and grew 67% for the full year to $10.09 billion.
Executives did not discuss risks associated with potential changes to federal tax credits under the Republican-controlled Congress that could affect its energy business.
But Taneja did acknowledge Tesla faces heightened global trade risks that could hurt its bottom line.
"There's a lot of uncertainty around tariffs," the CFO said, adding that Tesla remains "very reliant on parts from across the world for all our businesses." New tariffs, Taneja said, are "very likely" and would "have an impact on our business and profitability."
Tesla missed analyst expectations on top and bottom lines in the final quarter of 2024 and the full year.
Its normalized earnings of 73 cents/share in the fourth quarter missed the S&P Capital IQ consensus estimate of 77 cents/share, while Tesla's full-year adjusted earnings of $2.42/share came in under the consensus of $2.48/share.
Tesla's fourth-quarter revenues of $25.71 billion were 5.25% below consensus. The company generated $97.69 billion in 2024, up 1% from a year earlier and 1.85% below consensus.