Sign up for our free daily newsletter
Get the latest news and some fun stuff
in your inbox every day
Last week Tesla released some underwhelming numbers. For the whole of 2024, revenue rose just 1% to $97.7 billion. For the fourth quarter, Tesla reported revenue of $25.7 billion, only 2% higher than the same quarter the year before. The automotive division went backwards by 8%. All the heavy lifting was done by the energy generation and storage division, which grew by 113%, and services, which grew by 31%.
Despite those disappointing numbers, Tesla shares closed higher on the day. Why? On the earnings call Tesla CEO Elon Musk said that paid, unsupervised FSD (Full Self-Driving) is coming to Austin, Texas, in June. Unsupervised FSD is expected to be available throughout the US by the end of 2025 and the rest of the world by the end of 2026. If this happens, Tesla's revenue and profit will soar.
The beauty of the FSD functionality is that it is just a software update to all the Teslas already on the road. Almost overnight Tesla can open a new business unit that serves millions of customers. Given that FSD is software, the profit margins are huge too.
We shouldn't get too ahead of ourselves because FSD technology has been 'just a year or two away' for the last decade. Elon has a track record of overpromising and underdelivering when it comes to new products. Having said that, he and the Tesla team are amazing engineers who almost single-handedly brought viable EVs to the world.
Where to from here? Tesla remains a very high-risk holding. You own it today for the future potential from FSD, and maybe their robotics and renewables divisions. Shareholders trust Elon Musk to create amazing things at scale. Proceed with caution.
