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Tesla’s 2024 financial results are out—and they’re terrible

40 percent of its profit came from selling regulatory credits.

Jonathan M. Gitlin – | 638
A Tesla that crashed into a hardware store
Credit: Kai Eckhardt/picture alliance via Getty Images
Credit: Kai Eckhardt/picture alliance via Getty Images

Tesla released its financial results for 2024 on Wednesday afternoon, following the close of the markets. The maker of electric vehicles may have to invest in stocks of red ink, because 2024 results were even less impressive than the already-underwhelming 2023 numbers.

Q4, 2024

During the final quarter of last year, Tesla saw its automotive revenues fall by 8 percent compared to the same three months of 2023, dropping to $19.8 billion. It more than doubled its energy and storage revenues, which grew by 113 percent compared to Q4 2023, but this amounts to just $3 billion and a small fraction of Tesla's overall business. Similarly, services posted a 31 percent growth during those three months, but again the actual contribution in dollar terms was just $2.8 billion.

Total revenue grew by 2 percent in Q4, but income fell by 23 percent, and its operating margin has dropped to just 6.2 percent—the lowest since Q1 2024. By contrast, the industry average operating margin for an automaker is around 10 percent. Net profits fell an astounding 71 percent to $2.3 billion.

The year as a whole

For the whole of 2024, Tesla saw a 6 percent drop in automotive revenues, down to $77 billion. Energy generation and storage increased by 67 percent to a total of $10 billion. Services grew by 27 percent during the year, bringing in $10.5 billion in revenue. That means total revenue grew by 1 percent in 2024; over the same time period, Tesla's share price has increased by 103 percent.

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But gross profits fell by 1 percent, with net profits falling by a huge 53 percent to $7.1 billion for the year, making this Tesla's worst year since 2021, when it made just $5.5 billion in profit. Free cash flow dropped 18 percent during the year to $3.6 billion. Delving into the profit and loss statement, $2.8 billion of that profit came from selling regulatory credits to other automakers, not from selling cars or even supercharger access.

Tesla says that reduced average selling prices contributed to its lousy results, as well as an increase in operating expenses to fund sidelines in AI and robotics that generate nothing to the company's bottom line. These side ventures have goosed the company share price among investors who appear to believe CEO Elon Musk's claims that Tesla is no longer a car company.

For a not-car company, automotive sales brought in 77 percent of the company's revenue.

Interestingly, Tesla claims it believes that the Cybertruck—a niche model that only sells in small numbers in the US—will soon become eligible for a tax credit. This is despite Musk's public support for President Trump's plan to eradicate the $7,500 clean vehicle tax credit as soon as possible, which Musk says will harm other automakers more than his own.

For 2025, Tesla has made some very bold predictions. Energy storage revenues will "grow by at least 50 percent year-over-year," it claims. AI and software will generate profits, it claims. And stretching credulity, the company says it will grow automotive sales by "more than 60 percent" this year despite a model lineup that remains outdated and eclipsed in terms of features by rivals in China and even here in the US.

Investors appear to like what they saw, however—Tesla shares rose in post-market trading once the results became public.

Photo of Jonathan M. Gitlin
Jonathan M. Gitlin Automotive Editor
Jonathan is the Automotive Editor at Ars Technica. He has a BSc and PhD in Pharmacology. In 2014 he decided to indulge his lifelong passion for the car by leaving the National Human Genome Research Institute and launching Ars Technica's automotive coverage. He lives in Washington, DC.
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Turbofrog
I just want to note that about $600 million of that "profit" were because of adopting a different accounting approach in how they account for their cryptocurrency reserves.

https://www.koreaherald.com/article/10408866

A not insignificant portion of their revenue is also because of them selling carbon offset credits and not because of their core business (although I can't find a good source for that right now).
@Dr Gitlin while the latter half of @Coriolanus post is about regulatory credits, the first half is not noted in the article, and it really does add valuable additional context to Tesla's financial picture.

In addition to the regulatory credits which represented $692M of Tesla's $2.4B Q4 net income, new accounting changes to how digital assets are recognized means that $600M of Tesla's "profit" came from unrealized gains in the company's cryptocurrency books.

Net income was impacted by a $600 million mark-to-market benefit from Bitcoin due to the adoption of new accounting standards for digital assets.

Thinking on that just a bit more, it means that fully 26% of Tesla's reported GAAP net income this quarter actually came from unrealized Bitcoin, making the true numbers even more dismal. Regulatory credits are obviously meaningful, but when you back out those two factors, it means that Tesla's net automotive margin is down to something like 3%, which puts them in the bottom quartile of automakers.

Quite a dramatic fall from grace for a company that once had margins that were the pride of the whole industry.
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