Tesla’s Q4 Earnings Call: Musk Addresses Profitability, AI Ambitions, Optimus Robot, and Cybertruck Deliveries
Tesla’s (TSLA) fourth-quarter earnings fell short of analyst estimates, prompting CEO Elon Musk to join other company leaders for an earnings call to address investor concerns. This article delves into the key topics discussed during the call, including profitability, voting control in the era of artificial intelligence (AI), Tesla’s humanoid robot, and Cybertruck deliveries.
High Interest Rates, Low Margins
Musk emphasized the impact of high-interest rates on Tesla’s profit margins during the quarter. He acknowledged that if interest rates decline rapidly, margins could improve, but if they remain elevated, margins may suffer. Tesla’s reduced vehicle prices in Q4 negatively affected revenue, as the EV maker offered substantial price drops to attract buyers amidst macroeconomic challenges and high-interest rates.
The broader auto industry experienced similar trends, with the average sale price of Tesla vehicles witnessing a 25% drop in December compared to the previous year. Musk recognized that consumers’ affordability concerns in a high-interest-rate environment are a primary factor affecting Tesla’s sales.
Musk’s Voting Control Aspirations in the AI Arena
Musk expressed his desire for “strong influence, but not control” over Tesla before advancing the company’s AI initiatives. Earlier this month, Musk took to Twitter, where he is the owner, to convey his preference for 25% voting control of Tesla before expanding its AI capabilities. He expressed discomfort in leading Tesla’s AI and robotics efforts without significant influence.
When questioned about retail investors’ concerns regarding his statements, Musk clarified that while he envisions Tesla as a leader in AI and robotics, he is concerned about the potential for being voted out by shareholder advisory firms if he lacks sufficient influence. Musk emphasized that 25% control would provide him with a strong influence without granting him absolute control over the company, allowing for his dismissal under extreme circumstances.
Tesla’s Humanoid Robot, Optimus, on the Horizon
Musk expressed optimism about the potential for shipping some number of Optimus units in the upcoming year. Optimus, Tesla’s humanoid robot project, has been in development since 2022 and utilizes the AI technology that powers Tesla’s self-driving cars. Tesla recently shared a video showcasing the Optimus Gen 2 robot walking and performing basic tasks.
Musk acknowledged the inherent uncertainty surrounding a brand-new product but assured the public of regular updates on the project’s progress. He expressed his belief that the Optimus humanoid robot has the potential to become the “most valuable product of any kind, ever.”
Cybertruck Delivery Challenges: Production Bottlenecks, Not Demand Issues
Musk stated that the Cybertruck delivery issues are primarily due to production constraints rather than a lack of demand. Tesla delivered its first Cybertrucks, initially announced in 2019, towards the end of 2023. This led to investor concerns about delivery and profitability challenges.
Musk indicated that Tesla could potentially raise the price of the Cybertruck given the high demand and low supply, but he expressed reluctance to do so as it “doesn’t feel right.” Tesla’s annual production target for the Cybertruck in North America stands at approximately 250,000 units.
Stay tuned for further updates on Tesla’s progress in these key areas as the company navigates the rapidly evolving automotive and technology landscapes.