Tesla's Q4 Earnings Call: Shifting Focus from Cars to AI and Robotics

At Tesla's Q4 Earnings Call, The Check Is Due

Elon Musk is a very busy man. These days, his interests are varied and multi-faceted. He's focused on the AI race, cutting government spending in Washington D.C., advising President Donald Trump on just about everything of import, gaming, posting on his social media platform, space travel, and... whatever that was supposed to be. But his vast wealth comes from the stock price of his car company, Tesla. And Tesla's sales last year were not great. Now, investors have questions for today's fourth-quarter earnings call -- and they may even be tough questions for a change. Our preview of tonight's Tesla Q4 call kicks off this midweek edition of Critical Materials, our morning roundup of tech and mobility news. Also on tap today: investors weren't too convinced after General Motors' own annual report yesterday, and Trump's new Transportation Department head immediately targets fuel economy rules. Let's dive in. Tesla investors clearly have a lot on their minds. Even a quick scan of the online portal they use to pose questions ahead of the earnings call makes this obvious. They're asking about Full Self-Driving updates, cheaper Tesla EVs, the Optimus robot, long wait times for service, opportunities in AI, and the hows and whys of colonizing Mars. Musk has promised a lot over the years and he's been able to ride that wave, and his involvement with the Trump White House, to some of $TSLA's highest share prices ever. (Tesla shares traded at $389 at the time of this publication.) Yet as we've noted before, Tesla is still a car company, whether it wants to be or not. And Tesla's annual sales were down for the first time ever in 2024 as new EV competitors emerge, the lineup increasingly feels stale and some buyers seem turned off by Musk's politics and public behavior. One thing that investors of all sizes clearly want is news on a long-promised more affordable new Tesla. In the past, Musk has rolled his eyes at such an idea, saying that no new Tesla models should come with a steering wheel. Yet late last year, a Deutsche Bank report indicated that a cheaper "Model Q" (their name for it, not the official one) was indeed in the works. Investors want to see growth of some kind, not just promises. Yet Bloomberg seems to think that today's narrative will be all about AI and robotics, not cars: But what investors may be looking for is growth outlook -- this is where Musk's new narrative is important, as the right-wing billionaire has been trying to make a case that Tesla's future is in robotics and artificial intelligence (and therefore car sales are less important). One of the reasons why this pitch is convenient to Musk is that his extremist political reincarnation has damaged the brand, which used to cater to progressive, climate-conscious car owners who aren't exactly fans of Musk's new boss in Washington. Here's a bit more on that from Barron's: Tesla also plans to launch an AI-trained self-driving robotaxi service in late 2025. Musk recently said that Tesla's self-driving software would drive better than humans in the first half of 2025. Any self-driving updates will be meaningful for investors. But investors do seem to be getting more vocal about the "car sales" side of things. After all, if Musk really thinks Autopilot and Full Self-Driving are the future, people actually need to buy the Tesla EVs that run them. And that's where Tesla is running into a problem. At least one analyst and vocal Tesla critic, Gordon Johnson of GLJ Research, told CNN as much and blamed Musk directly -- especially considering the CEO's support for ending EV tax credits: "I think it's hurting Tesla tremendously. He's gone full MAGA," said Johnson. "Many Tesla buyers won't consider buying a Tesla again." But Johnson said the loss of the EV tax credit will make it more difficult for Tesla's cars to compete with gasoline-powered cars. And the company already has more capacity to build cars than it has buyers. "It's a huge negative for Tesla," Johnson said. "They have a demand problem. They can't sell out their existing capacity. Nine out of 10 car buyers are choosing gasoline-powered cars, not EVs. This makes EVs less competitive." That story also correctly points out that the Model Y Juniper -- the long-awaited update to the world's best-selling EV and, by some metrics, best-selling car, period -- arrived with zero fanfare from Musk or the company. Just some updates to its international websites and order portals going live. Tonight's call should be an interesting one. Check back later for more coverage from InsideEVs. Meanwhile, investors weren't exactly won over by GM's own Q4 earnings call yesterday. While the automaker beat estimates (despite taking a staggering $5 billion hit restructuring its China operations) and is making progress on truly profitable EVs, many analysts don't think GM has an adequate plan for the Trump 2.0 era: namely, tariffs on items from Canada and Mexico and a potential end to EV tax credits. Shares dropped 8.9% on Tuesday to $50.04. From Reuters: "There's just a lot of uncertainty between tariffs as well as the rules and regulations around EVs and tax incentives. With that uncertainty, that really isn't baked into GM's guidance at this point," said Jeff Windau, financial analyst at Edward Jones. GM CEO Mary Barra told investors on a conference call Tuesday that she believes Trump "wants to use policy and regulations in ways that will strengthen not harm domestic manufacturers like GM." Trump has said he wants to use tariffs to push companies to move operations back to the United States - but such moves can take years. In the meantime, GM has an "extensive playbook" pulled together in the event tariffs are imposed, GM's CFO Paul Jacobson told reporters on Monday prior to Trump's statements. The company had already started to bring vehicles in its international inventory in Mexico and Canada to the United States, Jacobson said. "Every delivery that we can make before a tariff is instituted, it's that much better, rather than sitting on inventory," he said. Expect a very rocky year -- or several years -- for the auto industry, especially with the potential of new tariffs. Case in point: the auto industry has a lot of rules to play by, both in the U.S. and globally. Those rules determine what technologies they have to invest in to meet various fuel economy, emissions and safety requirements. The Biden administration's EV policies were called a "mandate" because of the former president's informal goal to have all-electric cars make up 50% of the market by 2030, enforced somewhat by ever-stricter fuel economy rules that would essentially force automakers to make mostly zero-emission cars. Trump rolled back the fuel economy standards in his first term, before Biden reversed that decision. Now, Trump's newly confirmed U.S. Transportation Secretary, Sean Duffy, is wasting no time in trying to roll back those rules. Here's Bloomberg: Duffy, a former U.S. congressman and Fox News contributor, portrayed the action as removing government overreach by former President Joe Biden that had driven up the cost of new cars. The Biden administration's standards require automakers to reach an average of 50.4 miles per gallon across their new-car fleets by the 2031 model year. Trump also is presumed to want the Environmental Protection Agency to review or rewrite limits on vehicle tailpipe pollution that compel carmakers to sell more electric models. Although the Biden administration eased near-term requirements after pushback from automakers, the EPA estimated early last year that manufacturers might seek to comply with the requirements by boosting battery-electric vehicles to more than half of total US sales by 2032. Following Trump's election win, analysts at BloombergNEF lowered their forecasts for sales of fully electric and plug-in hybrid vehicle sales through the rest of the decade. BNEF said it expected plug-in models to be one-third of total US sales by 2030, down from the 48% share expected previously. This may sound good to some, but I think it's worth remembering that hybrid sales had a boom year in 2024 even as EV sales proved to be uneven. People want hybrids because they don't like paying for gasoline. And if car companies use some regulatory pass -- which usually ends up being short-term -- to slow-walk their transition to electrification, they're at risk of running behind globally. Some automakers may welcome these rules as a chance to double down on gas engines; others may stay the course of electrification and efficiency since they have to do that eventually, as well as compete globally. The responses to these rule changes will be very telling. These calls have been fairly uneventful in recent years. We'll see if tonight's is any different. What do you want to know?

Tesla Investors Don't Think Cars Don't Matter Anymore

AI-this, autonomy-that -- it's almost all you hear about in the tech world anymore. Everybody and their grandmother is running their own AI training model, am I right? Despite being commonplace, it's clear that these buzzwords are inspiring investor confidence in the stock market. And Tesla's focus on robots and AI, not cars, seems to be more than capable of moving the needle for Wall Street. Welcome back to Critical Materials, your daily roundup for all things electric and automotive tech. Today, we're chatting about investors dumping their confidence into Tesla's technology rather than its cars, Elon Musk declaring EV range a "solved" problem, and Tesla making it clear that it only wants to license Full Self-Driving to companies that are serious about it. Let's jump in. Tesla just posted its first-ever year-over-year decline in deliveries, a milestone that no CEO ever wants to hit. In any other universe, investors would sound the alarm, demanding answers about why Tesla's deliveries shrunk in a growing market and what Tesla is planning to do to remain competitive in today's changing EV landscape. But this isn't just any ol' company. This is Tesla, which means to expect the unexpected. Despite news that deliveries were down and the company missed both earnings and revenue, Tesla's quarterly earnings call wasn't filled with unhappy investors demanding accountability. Instead, those same people honed in on what they really see as the driver behind Tesla's value: artificial intelligence, autonomy and humanoid robots. Now, analysts originally anticipated that Tesla's CEO would be grilled about Tesla's new affordable car. Deutsche Bank spilled the news on the model what it calls the "Model Q" in December. The same note revealed that Tesla planned to announce "other new vehicles" throughout 2025, something which appeared to be hinted at in Tesla's earnings report. However, contrary to analysts' belief, not a single question was asked about a new model during the earnings call. Instead, it turned into a sales pitch filled with ideas of how Tesla's future plans go well beyond mere automobiles. Musk spent the majority of the call hyping up the future of Full Self-Driving, its Optimus humanoid robot and Tesla's vision of AI dominating the world. Investors were happy to entertain the ideas. $TSLA shares jumped in pre-market trading and they're on an upward trajectory as I write this. Not a single soul asked (or who was selected to ask, anyway) why Tesla's lineup -- aside from the refreshed Model 3, Model Y, and Cybertruck -- has remained stagnant while other automakers roll out cheaper and competitive EVs, especially in China where domestic brands reign supreme and companies like BYD are eating into market share with cars that people can actually afford. Nor did anybody question Tesla's income from regulatory credits when its CEO supports an administration in favor of gutting federal guidelines that actually help Tesla to be able to sell these credits to other automakers. And gains from Bitcoin? Well, Musk didn't crown himself The Dogefather for nothing. It's clear that Tesla believes it's way more than just a car company -- it's focusing on being an AI company. Investors seem to buy it, yet Tesla's stock barely flinched this week when other AI-focused companies took the hit attributed to DeepSeek's launch of its open-source R1 model. The earnings call was no different. In fact, Tesla's shares closed at $395.21 on Wednesday ahead of the earnings call. During after-hours trading, it shot up to $410. Investors are content to keep the hype train rolling. As long as Tesla is willing to serve up AI visions on a platter (along with a side of Optimus and FSD for dessert), the stock market is happy to keep Tesla's car business as an afterthought. During Tesla's Q4 earnings call held on Wednesday, CEO Elon Musk made a glaring prediction about EVs: the move from combustion to battery power is "inevitable." While he might be right, his justification feels a bit off, or at the very least, bordered pure conjecture. It did, however, give a bit of insight into why the CEO is in favor of curbing subsidies for the EV industry. After all, if everyone is going to switch eventually anyway, why foot the bill? There was one particular point that Musk made that may not sit right with those still waiting to adopt EVs. According to Musk, the only thing holding folks back from making the switch to an EV was range, and that, Musk says, is a "solved problem." Here's what Musk said during the earnings call: I think the that sustainable transport is inevitable. I'm highly confident that all transport uh will be autonomous electric, including aircraft, and that it simply can't be stopped any more than one could have stopped the Advent of the [...] internal combustion engine. Like, even if you've been the biggest horse Advocate on Earth, horses are the way. "Not these new-fangled automobiles. You can't stop the Advent of the automobile. It's going to happen," and you can't you can't stop the Advent of electric cars. It's going to happen. The only thing holding back electric cars was range and that is a solved problem. To Musk's credit, sure, EV range has improved. Hell, looking back to the General Motors EV1 which offered just 140 miles after its upgrade to nickel-metal hydride batteries will show you just how far we've come. Long gone are the days of the 100-mile EV and compliance cars. But to consider range "solved" is an entirely different statement. For many drivers, EV range still isn't where it needs to be. Just look how the stated range and real-world range differ so vastly for some EV owners, including those in cold climate states where real-world range can decrease 30% or more during the winter months. This makes the problem of range feel a lot less "solved" when you consider a 300-mile EV might struggle to break 180 miles in the cold. And let's not even get started on towing. One could argue that this isn't a range problem, but a charging problem. That could be a moot point in the U.S., except the new Presidential administration is openly looking to gut progress on bettering the country's charging infrastructure. It also doesn't take into account less densely populated areas of the U.S., or the rest of the world which may not have extensive charging networks. It's clear that other automakers accept EV range as an area of improvement. In fact, many companies around the globe are scrambling for progress on energy density -- the real key to solving EV range. There's a lot that goes into making a battery work in the real world on top of just how much electricity it can hold: charging speed, number of rated discharge cycles, and ease of manufacturing to name just a few. Reaching equilibrium between all of those is what many battery makers are working on nailing in cutting-edge projects today. CATL, for example, revealed a fast-charging LFP battery capable of achieving up to 621 miles of range with a density of 205 watt-hours per kilogram. For comparison, BYD's competing second-gen Blade battery system achieved 190 wh/kg while more robust (but harder to manufacture) cylindrical cell batteries can achieve a whopping 240 wh/kg or more of energy storage. The point here is that declaring range a solved problem undermines the progress and innovation that other OEMs are actively working to better. EV batteries are heavy, and by failing to innovate on the energy storage side of the car, these behemoths won't get any lighter. Yes, range is better, but "solving" it -- as Musk so monochromatically declared it -- is another thing entirely. I have to admit, it makes a great soundbite, though. Remember when Tesla said that it would be "happy" to license its Full Self-Driving to other automakers looking to equip their cars with some autonomy? That was almost two years ago, and despite Tesla saying at the time it was in talks with a major OEM to do exactly that, no partnerships have publicly materialized from Elon Musk's claims. During Tesla's quarterly earnings call, Musk was asked if other companies were interested in Tesla's FSD software. His answer made one thing clear: Tesla doesn't want to waste its time entertaining offers of a carrot dangled in front of it. If another automaker is knocking at its door, it better be prepared to go big. And if it's not? Well, don't even bother knocking. Here's Musk's shedding some light on talks about licensing FSD: What we're seeing is, at this point, significant interest from a number of major car companies about licensing Tesla's Full Self-Driving technology. What we generally said is the best way to know what to do is take one of our cars apart and then you can see where the placement of the cameras are [and] the thermal needs are of the Tesla AI computer. That's better than us sending some CAD drawings. We're only going to entertain situations where the volume would be very high, otherwise it is not worth the complexity. And we will not burden our engineering team with laborious discussions with other engineering teams until we obviously have unsupervised Full Self-Driving working throughout the United States. I think the interest level from other manufacturers to license FSD will be extremely high once it is obvious that, "Unless you have FSD, you're dead." Interestingly, Musk also added a tidbit about Tesla's conditions for licensing FSD. It would seem that despite the OEM being "happy" to license its tech, it might not be ready to do so just yet. Musk said that Tesla wouldn't "burden [its] engineering team with laborious discussions" until the automaker has unsupervised FSD working throughout the U.S. -- something which Tesla has (once again) claimed would be ready by the end of the year. Automakers are quickly discovering just how much of a sunk cost autonomy really is. Hell, GM even killed off its commercial robotaxi operations for Cruise, but it still kept Super Cruise alive under the belief that personal autonomy will be the future. But for automakers that can't afford to just light piles of cash on fire, licensing a prebaked solution like FSD makes sense -- if it works. At this point, if OEMs are truly rapping at Tesla's door to license and implement the tech in their own cars as-is, it would simply be driver-assistance features, because, and let's be honest, FSD still isn't full self-driving in the literal definition of the word. That raises the question: are other OEMs genuinely interested in partnering with Tesla for its as-is tech, or is the thought of licensing a fully functional FSD package just a PR flex? Let's see if it takes off once Tesla meets its goal of wide deployment. Its paid robotaxi launch in June may be a true public test worth watching out for. Tesla's fleet of Robotaxis is headed to Austin, Texas. Elon Musk revealed that the company plans to roll out for-pay rides starting in June, and it plans to do so with "no one in them" -- presumably meaning no safety driver. There's a lot to unpack here, but perhaps the biggest takeaway is just how many questions folks are raising about just how quickly Tesla will need to move to make this timeline a reality. For starters, the question of FSD comes into play. Tesla has been promising unsupervised FSD for years, and people still complain about the cars hopping curbs. Then there's charging. Assuming that Tesla moves forward with a fleet of existing production cars, someone will still need to be there to plug them in. And let's not even begin to think about how a human will still need to clean out the car regularly. As I mentioned before, GM retreated from the commercial robotaxi business specifically because of the challenges surrounding the human efforts needed to make it a reality. It's unlikely that Tesla is going to have a fleet of Optimus robots doing all of the human tasks associated with the robotaxi network (at least not in June when it plans to launch), so some planning in this department is needed rather quickly. That said, what is the single biggest hurdle you see Tesla needing to overcome in order to make its robotaxi venture a success? Let me know in the comments.