Tesla Earnings May Disappoint. Watch for Details on Robo-taxis.
Tesla’s fourth-quarter earnings are due to be released after Wednesday’s market close. Investors should expect weakness in the company’s core electric-vehicle business.
For the quarter, Wall Street analysts tracked by FactSet are looking for earnings per share of 43 cents from sales of $24.6 billion. A year ago, Tesla reported EPS of 73 cents from sales of $25.7 billion.
EV sales have dropped. Tesla delivered about 418,000 vehicles in the fourth quarter, down from about 496,000 in the year-ago period. Customers raced to buy EVs in the third quarter before the $7,500 federal purchase tax credit ended in September.
One bright spot is battery storage sales. Tesla deployed a record 14.2 gigawatt hours of energy storage products in the fourth quarter, up from 11 gigawatt hours a year ago.
Operating profit margins are expected to be less than 5%, down more than one percentage point year over year, hurt partly by falling regulatory credit sales. Tesla generates revenue by selling zero-emission vehicle credits, but demand for credits is falling after the Trump administration’s policy changes.
Falling sales, falling margins, and falling earnings. “It’s going to be very ugly,” said Shay Boloor, chief market strategist at technology research firm Futurum.
Car business fundamentals just haven’t mattered to investors lately. They are focused on AI opportunities, such as self-driving cars and robots–neither of which generate significant sales or earnings yet.
A focus on the future is one reason Tesla stock should move more significantly after CEO Elon Musk speaks. Tesla’s earnings conference call starts at 5:30 p.m. Eastern time.
Investors will be looking for more details about Tesla’s robo-taxi business, including expansion into other cities and Cybercab production. Tesla launched a self-driving cab service in Austin, Texas, in June using Model Y vehicles. Tesla is also planning to produce a purpose-built robo-taxi, the Cybercab, in 2026, which would be part of its robo-taxi operations.
Whatever is disclosed about the robo-taxi business should ultimately matter more to Tesla’s stock than bottom-line earnings– as long as they are roughly in line with Street expectations.