Tesla stock (TSLA) saw a slight rebound in early Friday trading following a 6% drop the previous day. The decline was triggered by the company’s announcement of its first-ever annual sales decline, despite achieving record deliveries of nearly 496,000 vehicles in the fourth quarter. While the figures fell short of Wall Street expectations, investors are now reassessing the company’s long-term potential, focusing on growth opportunities beyond traditional automaking.
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The sales figures highlighted challenges faced by Tesla’s legacy auto business amidst slowing EV demand and intensifying global competition. While China sales reached a record 657,000 units with an 8.8% year-over-year increase, exports from the Shanghai gigafactory to Europe and other markets declined by 24%.
Beyond EVs: Tesla’s Generational Opportunities
CEO Elon Musk emphasized Tesla’s focus on AI technologies, autonomous vehicles (robotaxis), energy storage, and robotics, rather than solely on traditional car manufacturing. He reiterated his projection of 20% to 30% vehicle delivery growth in 2025, barring unforeseen circumstances like a major war or significant interest rate hikes. Musk envisions producing up to 2 million autonomous “Cybercabs” annually by 2026.
Canaccord Genuity analyst George Gianarikas, who raised his Tesla price target to $404 per share following the delivery announcement, echoed this sentiment, highlighting Tesla’s “generational set of growth opportunities” in EVs, AI, energy storage, and robotics.
Energy Storage: A Key Driver for Profitability
Tesla’s Q4 report revealed a significant, often overlooked achievement: a 244% year-over-year growth in its energy storage division, with a record deployment of 11 gigawatt-hours. This sector, focused on residential and commercial markets with its Powerwall and Megapack products, saw deployments more than double to 31.5 GWh for the full year. CFRA analyst Garrett Nelson, who adjusted his Tesla price target to $530 per share, emphasized the potential for energy storage to be a “bottom-line driver” in Q4 due to its strong margins.
Q4 Earnings and Future Outlook
Tesla is scheduled to release its fourth-quarter earnings on January 29th. Analysts anticipate earnings of 72 cents per share on revenue of $27.23 billion, with a slight increase in gross margin to 18.85%. Nelson suggests a “buy the dip” strategy, anticipating positive developments in 2025 related to a federal autonomous driving framework, which could potentially drive multiple expansion and offset concerns about slowing sales growth.
Long-term Tesla bull and Deepwater Asset Management analyst Gene Munster believes investors will closely scrutinize Tesla’s Q4 profit margins and its overall growth and demand outlook. While Musk emphasizes autonomy, Munster notes the importance of EVs as the “foundation of autonomy.” Investors will be looking for updates on Musk’s delivery expectations for 2025, alongside the usual focus on margins. Tesla shares opened at $379.80 each on Friday, marking a slight increase of 0.14%.
