Tesla’s Results Underperformed, but Musk Promises a Revolution with Robots and Cyber Taxis

Tesla CEO Elon Musk announced a recovery in electric vehicle sales in 2025 following disappointing results last year and significant progress in artificial intelligence that, according to him, would enable autonomous driving on Texas roads by June.

Musk’s optimism comes after weaker financial results in the fourth quarter of 2024, where revenues and profits fell short of analysts’ expectations. Earlier this month, Tesla also reported its first annual decline in electric vehicle sales in over a decade.

During a conference call with investors, Musk announced that Tesla would launch an autonomous taxi service in Austin within the next six months, where the company’s headquarters is located. He also announced the unveiling of the humanoid robot prototype Optimus during the year and the start of production of a fleet of autonomous ‘cyber taxis’ in 2026.

Tesla Will Become the Most Valuable Company in the World

– In 2024, we made key investments in manufacturing, artificial intelligence, and robotics, which will bring enormous benefits in the future, at a level that is hard to comprehend. We are currently setting up production lines for what will, in my opinion, be an epic 2026, and 2027 and 2028 will be absolutely incredible – said Musk.

He reaffirmed plans to launch a refreshed version of the SUV model Y, Tesla’s best-selling model in the world, and to introduce ‘more affordable models’ in the first half of the year, but did not provide specific details.

– I see a clear path for Tesla to become far and away the most valuable company in the world. There is a scenario where Tesla will be worth more than the next five largest companies combined – added Musk, who also leads SpaceX, xAI, and the social network X.

Mixed Reactions from Investors

After the results were announced, Tesla’s shares initially fell four percent in after-hours trading, but soon recovered and rose by the same percentage, making Tesla currently the eighth most valuable company in the world.

Despite Musk’s optimistic forecasts, analysts remained skeptical.

– Tesla has talked about a return to vehicle sales growth, but did not specify a concrete target, although Musk had previously mentioned growth between 20 and 30 percent. While the long-term story still exists, the fourth quarter was a grounding moment for Tesla’s stock, which has increasingly diverged from actual results – said Dan Levy, an analyst at Barclays.

Musk dismissed the potential negative impact of Donald Trump’s decision to eliminate the $7,500 federal subsidy for electric vehicles, claiming that full electrification and autonomy of transportation is inevitable.

Significant Investments in AI

Tesla significantly increased its investments in artificial intelligence in the last quarter. Capital expenditures rose by 21 percent, reaching $2.8 billion, while it built a large AI cluster based on 50,000 Nvidia H100 chips at its Texas factory. This system, named ‘Cortex‘, is crucial for the development of Tesla’s autonomous driving. Progress in autonomous driving and obtaining regulatory approvals at the federal and state levels are key for the launch of Tesla’s robotaxi without a steering wheel and pedals, which is planned for mass production in 2026.

Musk claims that Tesla has a significant advantage over competitors due to the analysis of billions of hours of video recorded by Tesla vehicles.

– There is no company in the world better at real-world AI than Tesla. Honestly, I don’t even know who would be in second place… I would need a really big telescope to see them, they are so far behind us – said Musk.

Financial Results

In the fourth quarter of 2024, Tesla delivered 495,570 vehicles, a 2.3 percent increase compared to the previous quarter. Although it maintained an edge over Chinese BYD, the sales results fell short of expectations, and annual sales declined for the first time since 2011. Adjusted net income in the fourth quarter was $2.5 billion, below the expected $2.6 billion, while revenues rose two percent to $25.7 billion, also below the average analyst estimate of $27.2 billion.

The operating margin fell to 6.2 percent from the previous 8.2 percent, which Tesla attributes to lower prices of its key models S, X, and Y due to aggressive price cuts, as well as increased investments in artificial intelligence and research and development.

Despite the growing focus on robotics and AI, Tesla still generates about 80 percent of its revenue from car sales. An additional financial boost came from selling regulatory credits to competing manufacturers producing higher-emission vehicles, whose revenue increased by 60 percent to $692 million. Tesla’s rapidly growing energy division also contributed positively, more than doubling its revenue in the fourth quarter to reach $3.1 billion.