Tesla (TSLA) concluded 2024 on a high note, largely due to CEO Elon Musk’s ambitious strategies and a surprising political alignment. While the electric vehicle (EV) giant experienced a 70% year-to-date stock surge fueled by the post-Trump election rally, the journey was far from smooth. This analysis delves into three key highlights of Tesla’s 2024 performance and offers insights into potential developments in 2025.
Table Content:
Navigating Production Challenges and Embracing Robotaxis
Tesla’s 2024 began with a cautious outlook. In its Q3 2023 earnings report, the company projected “notably lower” production growth for the upcoming year. Investor concerns regarding profitability, coupled with a significant Q1 delivery shortfall and intensifying competition in the Chinese market, exerted downward pressure on Tesla’s stock price, reaching its lowest point in nearly a year.
In response to these challenges, Musk announced Tesla’s intention to unveil its highly anticipated robotaxi in August. This strategic move aimed to shift market sentiment and reaffirm Tesla’s commitment to innovation.
Balancing Robotaxi Ambitions with Affordable EVs
Initially, the robotaxi initiative raised concerns about potential delays in the launch of a more affordable EV model. Analysts speculated that the focus on robotaxis might signify the abandonment of the budget-friendly vehicle, a key driver for investor confidence. Musk’s previous statements regarding the profitability challenges associated with producing cheaper EVs further fueled these anxieties.
However, in its Q1 2024 earnings report, Tesla reassured investors by confirming its commitment to accelerating the development of affordable vehicles alongside the robotaxi project. This strategic clarification alleviated market concerns and contributed to a renewed sense of optimism. While the robotaxi reveal was eventually postponed to October due to design and functionality issues, the company reaffirmed its plans for a cheaper EV, providing more concrete details to analysts. According to Deutsche Bank analyst Edison Yu, this new model, tentatively named “Model Q,” is projected to launch in the first half of 2025 with a price tag under $30,000, including subsidies.
Musk’s Compensation Controversy and Trump’s Triumph
Beyond product development, 2024 witnessed a significant legal battle surrounding Musk’s compensation package. A Delaware judge invalidated his record-breaking $56 billion pay deal, deeming it unfair to shareholders. This decision triggered a protracted dispute, with shareholder activists opposing the package and major shareholders like Ron Baron supporting it. Despite shareholders reapproving the pay plan in June, the same judge overturned it again in December, leaving the matter unresolved and potentially heading for a Supreme Court appeal.
Musk’s open support for Donald Trump, whose unexpected presidential victory sparked a 15% surge in Tesla’s stock price, added another layer of complexity to the year. The subsequent rally, driven by anticipated easing of self-driving regulations under the Trump administration, propelled Tesla’s stock to all-time highs by mid-December.
Looking Ahead: A Trillion-Dollar Future?
Analysts remain overwhelmingly bullish on Tesla’s prospects for 2025. Wedbush analyst Dan Ives, citing the immense potential of AI and autonomous driving, raised his price target to $515 and predicted a $2 trillion market cap for Tesla by the end of 2025. Mizuho analyst Vijay Rakesh echoed this optimism, more than doubling his price target to $515. These projections highlight the market’s confidence in Tesla’s ability to capitalize on emerging technologies and maintain its leadership position in the EV industry. The coming year promises further developments in the “Model Q” launch and the ongoing saga of Musk’s compensation, setting the stage for another potentially transformative year for Tesla.
