Elon Musk wants you to focus on everything but Tesla’s struggling electric car business

Pay no attention to the main revenue driver behind the curtain.

1/30/25 8:59AM

Over the course of yesterday’s hour-long earnings call, Tesla Technoking Elon Musk spent a lot of time discussing Tesla’s other businesses. Optimus robots! Real-world AI! Autonomous ride hailing! Semis! Energy storage! Solar roofs! How the company could be the “ most valuable company in the world by far.” At one point, he muttered to himself, “Earth to Elon.” Very little time was spent on regular electric vehicles, the ones people drive and which make up the bulk of the company’s revenue.

Partly that’s just what Musk does: sells a dream, where Tesla is an AI, autonomous vehicle, and robotics venture instead of a lowly car company. “ My prediction long-term is that Optimus will be overwhelmingly the value of the company,” Musk said. If you focus too much on regular EVs, the present, or, God forbid, last quarter’s numbers, you are dull and unimaginative.

Partly, that’s because the present day looks very bad.

Tesla missed the Street’s expectations on a number of fronts. Tesla sold fewer cars in 2024 than it did in 2023, especially in the US. As such, automotive revenue was down 8% in the fourth quarter and down 6% for the year.

Thanks at least in part to Musk’s political machinations, would-be electric vehicle buyers would much rather purchase a Toyota.

Average sales prices were down — not because the company released its long-teased affordable car, but rather because Tesla has had to slash prices to move the meager number of vehicles it did. As a result, its margins declined.

Profit dropped a whopping 53% thanks to the declining sales price as well as increased operating expenses driven by AI and other R&D projects, the company said. That was despite a $600 million mark-to-market benefit from bitcoin.

A good chunk of the profit also came from growth in regulatory credits, an uncertain income source going forward in the Trump administration.

Last quarter, Musk predicted Tesla’s vehicle sales would grow 20% to 30% in 2025. Now that’s been modulated to a “return to growth” this year. What a difference a quarter makes.

There were of course some highlights, much of them slated to happen sometime in the future.

Energy generation and storage revenue grew 67% in 2024 and 113% in Q4. The company expects energy storage deployments to grow at least 50% this year.

Plans for more affordable car models are still on track for the first half of this year, though Musk gave few details on what exactly those are.

Importantly, Musk also said Tesla will begin offering paid rides in autonomously driven Teslas in Austin this June, “many regions” of the US by year-end, and everywhere in North America next year. (Notably, Google’s Waymo is already in Austin and is moving to 10 new cities this year as well.)

Of course, take Musk’s future timelines with a shaker of salt.

The richest man in the world can will outcomes into existence mortals can’t, and to some extent an investment in Tesla is an investment in Musk himself, but that doesn’t make it good business. And connections and clout can conceal a variety of ills. Pointing in every other direction doesn’t mean you shouldn’t keep your eyes on the road (the one that exists, now).

For Tesla bulls, of course, Musk and his company can do no wrong. The stock was up 4% after its earnings statement was released yesterday, despite all the bad news, and remains up over 4% in premarket trading.

Millie Giles

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As Google Chrome and Microsoft Edge ramp up AI offerings, Firefox is betting people will want an off switch.

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Tesla and Google’s Waymo to Senate committee: Fix self-driving laws or China will win

Ahead of their appearances Wednesday at a Senate committee hearing on the future of self-driving, the two biggest names in the sector, Tesla and Google’s Waymo, are talking the same book.

Both companies are warning lawmakers that without a federal framework for autonomous vehicles — something Congress has debated for years and is now considering again as part of broader transportation legislation — China will seize the lead.

“The United States is locked in a global race with Chinese AV companies for the future of autonomous driving, a trillion-dollar industry comparable in strategic importance to flight and space travel,” Waymo Chief Safety Officer Mauricio Peña said in written remarks ahead of the event. “In the absence of US leadership on a national AV legislative framework, Chinese AV competitors will fill the gap and set the safety and technical standards for the rest of the world.”

Tesla Vice President of Vehicle Engineering Lars Moravy, for his part, wrote, “If the US does not lead in AV development, other nations — particularly China — will shape the technology, standards, and global market.” He added, “China will be the dominant manufacturer of transportation for the 21st century.”

The two companies face steep competition from Chinese firms, including Baidu, which operates a robotaxi service, and BYD, whose EVs offer driver assistance technology similar to Tesla’s Full Self-Driving and which has been outselling the US automaker.

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$126B

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Waymo is now worth $126 billion, after raising $16 billion in a funding round led by its parent company, Google. With this capital, Waymo plans to expand its robotaxi service to more than 20 new cities, including international markets.

On Wednesday, Waymo’s chief safety officer will testify at a Senate Committee on Commerce, Science, and Transportation hearing, alongside a representative for Tesla, urging lawmakers to create a national regulatory framework for autonomous vehicles.

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Dan Ives thinks Tesla will someday merge with SpaceX, too

Wedbush Securities analyst Dan Ives is just like us: he thinks that Elon Musk’s Tesla and SpaceX could someday become one company.

In a note this morning, Ives argued there’s a “growing chance” Tesla will eventually merge in some form with newly merged SpaceX and xAI, as Musk builds what he sees as a single, sprawling AI ecosystem spanning both space and Earth.

Over time, Ives wrote, he thinks Musk will look to “combine forces/technologies,” with the long-term goal of owning and controlling more of the AI stack. Ives thinks Musk could achieve that “holy grail” over the next year and a half.

Earlier today, we pointed out the myriad similarities between Tesla and SpaceX — shared impossible missions, common methods for achieving those goals, and a physics-first, economics-later ethos — as well as Musk’s long-standing penchant for knitting his companies together in the first place.