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.
30%: Tesla Faces Questions. A Lot Of Them
Photo by: InsideEVs
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.
30%: Investors Not Convinced By GM
Photo by: Chevrolet
2024 Chevrolet Equinox EV
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.
90%: Trump’s DOT Chief Targets Fuel Economy Rules
Los Angeles Traffic 1950s
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.
100%: What News Do You Want To Hear From The Tesla Investor Call?
These calls have been fairly uneventful in recent years. We’ll see if tonight’s is any different. What do you want to know?
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