Tesla Points to Energy, Robotics Businesses as EV Sales Plummet

Tesla is at a crossroads, one that the electric vehicle (EV) maker with autonomy dreams may not be able to “full self-drive” (FSD) its way out of.

The company’s fourth quarter and full year 2024 earnings, reported Wednesday (Jan. 29), reveal a business grappling with internal challenges and external pressures that have culminated in a decline in profitability.

For the fourth quarter of 2024, Tesla reported a 70% decrease in net income compared to the same period in 2023. This sharp decline was partly attributed to the absence of a one-time non-cash tax benefit of $5.9 billion that bolstered the previous year’s results, and saw the company ultimately record a net income of $2.3 billion on total revenues of $25.7 billion, which were up 2% year-over-year but below Wall Street expectations.

Wednesday’s earnings, the first with Musk now a key figure in the White House, also saw the disclosure of Tesla’s plans to launch its robotaxi Cybercab this year, as well as pilot its Optimus humanoid robot.

“2025 will be a seminal year in Tesla’s history as FSD (Supervised) continues to rapidly improve with the aim of ultimately exceeding human levels of safety. This will eventually unlock an unsupervised FSD option for our customers and the Robotaxi business, which we expect to begin launching later this year in parts of the U.S. We also continue to work on launching FSD (Supervised) in Europe and China in 2025,” the company stated in its financials.

The Tesla Cybercab is set to “begin volume production” in 2026, leveraging Tesla’s “unboxed” manufacturing strategy.

As the EV pioneer continues to battle automotive market pressures, price reductions and intensifying competition, it is also doubling down on artificial intelligence (AI), energy storage and autonomous driving.

“There is a path where Tesla is worth more than the next top 5 companies combined. There’s a path to that. It is difficult, but achievable,” Tesla CEO Elon Musk told investors on Wednesday. “It is overwhelmingly due to autonomous vehicles and autonomous humanoid robots.”

Read more: From Factories to the Fast Lane, Unpacking Autonomy’s Potential

Tesla’s operating margin for the most recent quarter dropped to 6.2% from 8.2% for the same quarter last year, which executives attributed to price reductions on the Model S, 3, X, and Y lineup, paired with higher R&D investments in AI.

Still, the EV maker reported 495,570 cars delivered for Q4 and 1.79 million deliveries for the fiscal year, Tesla’s first annual decline in meeting delivery targets. The company remains adamant that greater affordability will drive mass adoption, but whether it can sustain its margins while doing so remains a critical question for investors.

Against a challenging backdrop for Tesla’s EV business, the company’s Energy Generation and Storage division is emerging as a potential high-margin growth engine. The company deployed a record 11 GWh of energy storage in Q4, primarily driven by Megapack and Powerwall 3 production.

Tesla added over 10,000 new Superchargers in 2024, a 19% YoY increase, and welcomed more third-party automakers to the North American Supercharger network. Tesla’s storage solutions are in high demand, and the company expects energy storage deployments to grow by at least 50% YoY in 2025, making it a critical part of Tesla’s long-term financial stability.

Read more: Tesla’s ‘Cybercab’ Event Shows Autonomy Still More Hollywood Than High-Impact

Musk made it clear on Wednesday’s call: Tesla’s future profitability will hinge not just on hardware, but on software and AI-driven fleet services.

“Very few people understand the value of FSD and our ability to monetize the fleet,” said Musk. “A passenger car only has around 10 hours of utility a week. Autonomous cars will have a multiple of this.”

As of January, Tesla vehicles have collectively driven more than three billion miles using FSD, a major milestone in the company’s autonomy ambitions. The latest FSD V13 software boasts major improvements in safety and real-world driving capabilities, including automated parking and reversing.

In 2025, Tesla plans to launch a supervised FSD option in Europe and China, expanding its footprint beyond North America. But a real game-changer could be the introduction of a fully unsupervised FSD option and Tesla’s Robotaxi business, set to begin rolling out later this year in select U.S. markets.

If Tesla can crack the code on unsupervised autonomy, it could disrupt not just the car industry but also ride-hailing, logistics and public transportation. However, regulatory challenges remain, and widespread adoption could take longer than Musk’s optimistic timeline suggests.

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