Investor's Corner
Tesla crushes short thesis on declining Model 3 demand
Tesla announced during its Q2 2018 earnings call that interest and demand for the Model 3 remains strong, particularly from customers who are not part of the company’s initial line of reservation holders. The update follows months of speculation that the rollout of the Model 3 has been anything but smooth. Since starting production of the electric car, Tesla has faced difficulty after difficulty, spurred by aggressive timelines announced by CEO Elon Musk and bottlenecks that emerged from its production lines. When the Model 3 was released, Elon Musk boldly declared that Tesla would aim to manufacture 5,000 of the vehicles per week by the end of 2017. That goal proved elusive until the end of Q2 2018, and only because Tesla adopted a “burst build” strategy.
While Tesla managed to hit its target of manufacturing 5,000 Model 3 per week at the end of Q2 2018, doubts from the company’s critics about the demand for the electric car emerged. As noted by Elon Musk during the recently held earnings call, Tesla actually sustained the Model 3’s 5,000/week production rate for multiple weeks in July. With the company producing more vehicles, Tesla began stockpiling more of the finished Model 3 in several lots such as the Burbank Airport while the cars waited for delivery.
Viewed by the company’s critics, the lots filled with vehicles were proof that demand for the Model 3 was declining, and that the cars indicated that customers were opting out of deliveries due to poor quality. Latrilife, a Tesla critic, even announced on Twitter that Tesla’s Burbank Airport lot is under 24/7 surveillance. Goldman Sachs analyst David Tamberrino also published a note recently stating that Model 3 demand appears to be waning based on social media activity around the electric car.
According to Tesla on its recently held earnings call, however, interest in the Model 3 is alive and well. While responding to a question from Toni Sacconaghi of Bernstein, Tesla worldwide head of sales Robin Ren stated the company now sees more orders for the AWD dual motor and Performance variants combined compared to the Long Range RWD Model 3. Perhaps even more importantly, Tesla has also been seeing interest in the Model 3 coming from individuals who are not part of the electric car’s list of reservation holders.
“Since we opened the configurator to the general public in early July, we have seen an increased demand coming from people who do not currently hold a reservation. This is something that we found super exciting. These are the people who have no idea about Model 3 and they heard about Model 3 is available to order. Many of them requested test drives.
“Since early July, we have over 60,000 test drive requests in the US alone. These people come into our stores, do the test drive, and they become super excited, and they decide to order the car. We believe the strong demand, especially from non-reservation holders, will continue as we increase production.”
Tesla also noted that Model 3 customers have been trading in vehicles that are not in the electric car’s segment. The Model 3 competes in the midsize luxury sedan market, but the Top 5 vehicles the electric car’s customers have been trading in are the Toyota Prius, BMW 3 Series, Honda Accord, Honda Civic, and the Nissan Leaf. These vehicles, save for the BMW 3 Series, are not luxury sedans at all. Instead, they belong to a more affordable segment in the mainstream auto market. This means that as Tesla produces more of the electric car, even customers who drive more affordable vehicles are considering the purchase of a Model 3, a car that is more expensive.
Part of this could be due, of course, due to Tesla’s promised $35,000 Standard Range RWD version of the Model 3, which is expected to start production in 6-9 months. At its entry-level price, the Model 3 has the potential to take a big chunk of the midsize sedan market, possibly even taking on mainstays such as the Toyota Camry. Even without its base model, however, the electric car is still a compelling purchase, considering that it is one of the only vehicles on the road that is set to get better over time, thanks to Tesla’s trademark over-the-air updates. And that, for some customers, is worth the extra investment.
Investor's Corner
Tesla (TSLA) Q4 and FY 2025 earnings results
Tesla’s Q4 and FY 2025 earnings come on the heels of a quarter where the company produced over 434,000 vehicles, delivered over 418,000 vehicles, and deployed 14.2 GWh of energy storage products.
Tesla (NASDAQ:TSLA) has released its Q4 and FY 2025 earnings results in an update letter. The document was posted on the electric vehicle maker’s official Investor Relations website after markets closed today, January 28, 2025.
Tesla’s Q4 and FY 2025 earnings come on the heels of a quarter where the company produced over 434,000 vehicles, delivered over 418,000 vehicles, and deployed 14.2 GWh of energy storage products.
For the Full Year 2025, Tesla produced 1,654,667 and delivered 1,636,129 vehicles. The company also deployed a total of 46.7 GWh worth of energy storage products.
Tesla’s Q4 and FY 2025 results
As could be seen in Tesla’s Q4 and FY 2025 Update Letter, the company posted GAAP EPS of $0.24 and non-GAAP EPS of $0.50 per share in the fourth quarter. Tesla also posted total revenues of $24.901 billion. GAAP net income is also listed at $840 million in Q4.
Analyst consensus for Q4 has Tesla earnings per share falling 38% to $0.45 with revenue declining 4% to $24.74 billion, as per estimates from FactSet. In comparison, the consensus compiled by Tesla last week forecasted $0.44 per share on sales totaling $24.49 billion.
For FY 2025, Tesla posted GAAP EPS of $1.08 and non-GAAP EPS of $1.66 per share. Tesla also posted total revenues of $94.827 billion, which include $69.526 billion from automotive and $12.771 billion from the battery storage business. GAAP net income is also listed at $3.794 billion in FY 2025.
xAI Investment
Tesla entered an agreement to invest approximately $2 billion to acquire Series E preferred shares in Elon Musk’s artificial intelligence startup, xAI, as part of the company’s recently disclosed financing round. Tesla said the investment was made on market terms consistent with those agreed to by other participants in the round.
The investment aligns with Tesla’s strategy under Master Plan Part IV, which centers on bringing artificial intelligence into the physical world through products and services. While Tesla focuses on real-world AI applications, xAI is developing digital AI platforms, including its Grok large language model.
Below is Tesla’s Q4 and FY 2025 update letter.
TSLA-Q4-2025-Update by Simon Alvarez
Tesla has scheduled its Earnings Call for Q4 and Full Year 2025 for next Wednesday, January 28, at 5:30 p.m. EST, and investors are already preparing to get some answers from executives regarding a wide variety of topics.
The company accepts several questions from retail investors through the platform Say, which then allows shareholders to vote on the best questions.
Tesla does not answer anything regarding future product releases, but they are willing to shed light on current timelines, progress of certain projects, and other plans.
There are five questions that range over a variety of topics, including SpaceX, Full Self-Driving, Robotaxi, and Optimus, which are currently in the lead to be asked and potentially answered by Elon Musk and other Tesla executives:
- You once said: Loyalty deserves loyalty. Will long-term Tesla shareholders still be prioritized if SpaceX does an IPO?
- Our Take – With a lot of speculation regarding an incoming SpaceX IPO, Tesla investors, especially long-term ones, should be able to benefit from an early opportunity to purchase shares. This has been discussed endlessly over the past year, and we must be getting close to it.
- When is FSD going to be 100% unsupervised?
- Our Take – Musk said today that this is essentially a solved problem, and it could be available in the U.S. by the end of this year.
- What is the current bottleneck to increase Robotaxi deployment & personal use unsupervised FSD? The safety/performance of the most recent models or people to monitor robots, robotaxis, in-car, or remotely? Or something else?
- Our Take – The bottleneck seems to be based on data, which Musk said Tesla needs 10 billion miles of data to achieve unsupervised FSD. Once that happens, regulatory issues will be what hold things up from moving forward.
- Regarding Optimus, could you share the current number of units deployed in Tesla factories and actively performing production tasks? What specific roles or operations are they handling, and how has their integration impacted factory efficiency or output?
- Our Take – Optimus is going to have a larger role in factories moving forward, and later this year, they will have larger responsibilities.
- Can you please tie purchased FSD to our owner accounts vs. locked to the car? This will help us enjoy it in any Tesla we drive/buy and reward us for hanging in so long, some of us since 2017.
- Our Take – This is a good one and should get us some additional information on the FSD transfer plans and Subscription-only model that Tesla will adopt soon.
Tesla will have its Earnings Call on Wednesday, January 28.
Elon Musk
Tesla locks in Elon Musk’s top problem solver as it enters its most ambitious era
The generous equity award was disclosed by the electric vehicle maker in a recent regulatory filing.
Tesla has granted Senior Vice President of Automotive Tom Zhu more than 520,000 stock options, tying a significant portion of his compensation to the company’s long-term performance.
The generous equity award was disclosed by the electric vehicle maker in a recent regulatory filing.
Tesla secures top talent
According to a Form 4 filing with the U.S. Securities and Exchange Commission, Tom Zhu received 520,021 stock options with an exercise price of $435.80 per share. Since the award will not fully vest until March 5, 2031, Zhu must remain at Tesla for more than five years to realize the award’s full benefit.
Considering that Tesla shares are currently trading at around the $445 to $450 per share level, Zhu will really only see gains in his equity award if Tesla’s stock price sees a notable rise over the years, as noted in a Sina Finance report.
Still, even at today’s prices, Zhu’s stock award is already worth over $230 million. If Tesla reaches the market cap targets set forth in Elon Musk’s 2025 CEO Performance Award, Zhu would become a billionaire from this equity award alone.
Tesla’s problem solver
Zhu joined Tesla in April 2014 and initially led the company’s Supercharger rollout in China. Later that year, he assumed the leadership of Tesla’s China business, where he played a central role in Tesla’s localization efforts, including expanding retail and service networks, and later, overseeing the development of Gigafactory Shanghai.
Zhu’s efforts helped transform China into one of Tesla’s most important markets and production hubs. In 2023, Tesla promoted Zhu to Senior Vice President of Automotive, placing him among the company’s core global executives and expanding his influence beyond China. He has since garnered a reputation as the company’s problem solver, being tapped by Elon Musk to help ramp Giga Texas’s vehicle production.
With this in mind, Tesla’s recent filing seems to suggest that the company is locking in its top talent as it enters its newest, most ambitious era to date. As could be seen in the targets of Elon Musk’s 2025 pay package, Tesla is now aiming to be the world’s largest company by market cap, and it is aiming to achieve production levels that are unheard of. Zhu’s talents would definitely be of use in this stage of the company’s growth.
Tesla announces massive investment into xAI
Tesla (TSLA) Q4 and FY 2025 earnings results
