Tesla earnings recap: Elon Musk talks paid robotaxi rides in June, Optimus 'uncertainty,' and more as stock rises

In a question about how President Trump's potential reversal of Biden-era EV mandate could slow EV uptake in the US, Musk says "sustainable transport is inevitable." He adds that the shift to electric vehicles, including aircraft, "can't be stopped" any more than the advent of the external combustion or steam engine.

"You can't stop the advent of electric cars," Musk says. "It's going to happen."

He says electric vehicles' range was "only thing holding back" adoption, and the issue has been solved.

Musk fields a question about whether people will be able to try unsupervised full-self-driving in their personal Tesla vehicle in Austin in June — or if Tesla's fleet will be the only way to try it out.

Musk says the latter, for now. However, it will be a paid ride service open to people in Austin.

He expects Tesla will be operating with its internal fleet in several cities by the end of the year. He says "it's probably next year" when people can add or subtract their car from the fleet. He compares the model to Airbnb where people can add or subtract a house or guest room to the Airbnb inventory.

Musk is asked about LIDAR — which he famously has criticized — and if his feelings have changed or if he still dislikes it to the point that he wouldn't use it, even if it was free. (Tesla's cars primarily rely on its cameras.)

Musk says his feelings haven't changed.

"We even have a radar in the car and we turned it off," he says.

LIDAR is "simply the wrong solution for driving cars on the road," he adds.

"Humans drive without shooting lasers out of their eyes, unless you're Superman," Musk says.

He says the road system was designed for an optical neural net, and cameras combined with Tesla's neural net are the solution for FSD — not a neighborhood-by-neighborhood mapping approach used by some of the company's competitors.

Musk says that next year, Tesla's constraints are likely to just be regulatory, pointing to Europe.

Europe is a "layer cake of regulations and bureaucracy," he says.

"Too many refs on the field."

Musk says the humanoid robot's design is "rapidly evolving" and Tesla has the best robotics team in the world.

He says other companies lack "real-world AI" and "the ability to scale manufacturing to millions of units a year."

Musk gives a "very rough guess" that Tesla will start delivering Optimus robots to other companies in the second half of next year.

He says once it's "at a steady state of above a million units a year," he expects the production cost of the robot to be less than $20,000 a year.

Musk fields a question about whether fully autonomous rides will happen in Texas and California this year.

"I'm confident that we will release unsupervised FSD in California this year," Musk says.

Musk adds that the company will likely release it in "many regions of the country" by the end of 2025.

Musk says the safety standard "has to be very high" because as soon as there's an accident involving autonomous vehicles, it will "get worldwide headlines."

Musk says there's "uncertainty on the exact timing" with Optimus.

"It's not like a train arriving at the station," Musk says. "For Optimus, we are designing the train and the station in real time, while also building the tracks."

He says the internal plan calls for "roughly 10,000 Optimus robotics to be built this year." He said it's unlikely the company will make that many by December, but he expects it's more likely it will be able to make several thousand of the humanoid robot.

Musk says he understands his revenue predictions with Optimus "sound completely insane," but he thinks it "will prove to be accurate."

"We feel confident in being able to do an initial launch of unsupervised," Musk says.

He says the company is already testing thousands of fully autonomous vehicles in Fremont, California, and will soon be doing the same in Austin and elsewhere in the world, "which is pretty cool."

"This is not some far off mythical situation, it's literally five, six months away," Musk says.

Musk says Tesla is putting a "toe in the water gently at first" to make sure "everything is cool" before putting a "few more toes" and eventually "a foot in the water." He says the safety of the general public and passengers in autonomous cars will be a top priority.

Musk starts off by congratulating the Tesla team on achieving record production and deliveries in the fourth quarter. Tesla's fourth-quarter deliveries beat the same period in 2023.

Musk also repeats some of his past predictions, including that Tesla has a difficult but achievable path to eventually be worth more than the next five companies combined. Tesla's future value will be driven by autonomy and robots, Musk says.

He says the company is focused on "maximizing volumes" and doubling down on autonomy.

"Doubling is not even enough," Musk said, suggesting 10x may be more appropriate characterization.

The Ev giant included a photo in its fourth-quarter earnings press release of Cortex, its 50k GPU training cluster at Tesla's Texas Gigafactory, that it completed in the fourth quarter.

The company says Cortex "helped enable V13" of FSD and aided with safety and comfort improvements.

Cortex is different than Colossus, which is xAI's supercomputer that runs on about double the amount of Nvidia H100 chips. Musk previously posted a video of Tesla's GPU training center in August.

Tesla usually dedicates time to answering questions from its anonymous retail investor forum during its analyst call.

The top upvoted questions leading up to the call are focused on FSD, and the company's humanoid robot Optimus. Investors also asked questions about Musk's political involvement and the Cybertruck.

The following questions were in the top 10 upvoted questions in the forum as of 5:00 p.m. ET.

"Is unsupervised FSD still planned to be released in Texas and California this year," one question with 3.7K upvotes says. "What hurdles still exist to make this happen?"

"When will Tesla start selling Optimus and price," a question with 2.6K upvotes says.

"Is there a new affordable Tesla model coming soon," a question with 1.7K upvotes says.

The company says "preparations are underway across" its factories to begin producing new products, including cheaper models, in the first half of 2025.

The vehicles will be "produced on the same manufacturing lines" as its current EV lineup.

"This approach will result in achieving less cost reduction than previously expected but enables us to prudently grow our vehicle volumes in a more capex efficient manner during uncertain times," the company says.

The company says its energy storage business hit its "highest-ever gross profit generation" in the fourth quarter. Its energy generation and storage business hit $3.06 billion in revenue and went up 113% year-over-year.

The company says it completed construction of Megafactory Shanghai in December and will begin ramping this quarter. Tesla also says it's continuing to "ramp Powerwall 3 production and launch in additional markets."

Thomas Monteiro, senior analyst at Investing.com tells BI that energy storage was a bright spot in the earnings report.

"Energy storage is a thriving business and should increase its support for Tesla's larger operation, mainly due to the latest advancements, but also due to the nice macro backdrop," Monteiro says.

RBC Capital markets analyst Tom Narayan says in an analyst note following the earnings release that "energy storage appears to be a significant growth driver in '25,"

Musk previously said in the company's Q3 earnings call that the opportunity ahead for the company's energy business was "gigantic."

The company said in the fourth-quarter earnings press release that the cybercarb is "scheduled for volume production starting in 2026."

"Our purpose-built Robotaxi product — Cybercab — will continue to pursue a revolutionary 'unboxed' manufacturing strategy," Tesla says in the report.

That's in line with Musk's previous estimate. The CEO said in the company's third-quarter earnings that Cybercab will reach volume production in 2026 and aimed for at least 2 million units anually in multiple factories.

Although Tesla sold off this week on the supposed threat of AI competition from DeepSeek, Morningstar doesn't consider the upstart AI tool a significant risk: Tesla's software advantage comes from billions of miles worth of FSD testing, it said.

However, Tesla stock is still considerably overvalued, Morningstar said. Investors may need to brace for deliveries to disappoint, as the production of new, low-cost car models will take longer than projected.

Similarly, the Robotaxi launch will be delayed beyond the firm's 2026 timeline, given that the needed software will require improvements.

Morningstar maintains a "narrow moat" rating for Tesla, and holds a fair value estimate of $210 per share.

Tesla is bound for a golden era of growth as friendly White House policies will fast-track the firm's autonomous driving and AI initiatives, says Wedbush Securities analyst Dan Ives.

The company's tech efforts will start to show in its valuation over the next 12-18 months, helped by FSD and the Tesla Cybercab. "We believe Tesla remains the most undervalued AI play in the market today."

According to Ives, investors can expect solid delivery demand this year driven by China. Together with the firm's autonomous vision, Tesla could reach a $2 trillion market cap by the end of 2025.

Wedbush Securities maintained an "outperform" rating on Tesla. It raised the price target to $550, over 41% higher than the stock's current level.

Tesla is set for a strong fourth-quarter report, underscored by inventory-supported free cash flows and the potential for deferred revenue tied to full self-driving.

Morgan Stanley expects most attention to fall on Tesla's announcements regarding AI and automation, including Cybercab deployment, an "AI Day," and progress on the firm's humanoid "Optimus" robot.

Given its many tech projects, investors can treat Tesla as an "embodied AI 'ETF,'" the bank said. In this role, it will benefit from White House policies that will likely boost domestic AI business.

"Tesla's role in helping to 'fill the void' of next gen manufacturing and supply chain will be an increasingly consequential driver of growth and shareholder value," wrote equity analyst Adam Jonas.

Morgan Stanley has an "overweight" rating on Tesla with a $430 price target, implying nearly 10% upside from Wednesday's stock price.

Although Tesla's latest deliveries numbers disappointed earlier this month, RBC is gearing for deliveries to be a bright spot for the EV maker in 2025. The introduction of affordable models in the first half of the year will help deliveries create a $2.7 billion boost to gross profits, though lower pricing will create a billion-dollar offset.

More immediate catalysts revolve around Tesla's achievements in autonomy.

"While we do think the new administration could help with federal deregulation of self-driving vehicles, ultimately, the success of Tesla's autonomy ambitions, especially as it relates to robotaxis, will come from how well [full-self driving] develops," the bank wrote.

Wider adoption of FSD would lead to higher margins in the near term. This isn't impossible, and could happen with help from price cuts, RBC said.

RBC has an "outperform" rating on Tesla stock and a price target of $440, about 12% above current levels.

Fourth quarter

• Adjusted EPS estimate: $0.75
• EPS estimate: $0.67
• Revenue estimate: $27.21 billion
• Gross margin estimate: 18.9%
• Operating income estimate: $2.68 billion
• Free cash flow estimate: $1.75 billion
• Capital expenditure estimate: $2.72 billion

Full year

• Production estimate: 2.15 million
• Deliveries estimate: 2.07 million
• Capital expenditure estimate: $10.72 billion

Source: Bloomberg data