The bold commitments helped investors overlook Tesla’s underwhelming Q4 results, which showed shrinking margins and lower-than-expected revenue due to delayed model updates and intensifying competition.
The automaker ended 2024 with its first-ever annual decline in vehicle deliveries, despite aggressive price cuts and financing incentives aimed at boosting sales.
However, the company expects its vehicle business to return to growth in 2025, though it did not reaffirm Musk’s previous forecast of a 20%-30% sales increase for next year.
Autonomous Ride-Hailing and Affordable EVs: Key to Tesla’s Next Growth Phase?
The automaker shares have been rallying on speculation that a potential Donald Trump presidency—to which Musk contributed approximately 250 million dollars—could pave the way for a more favorable regulatory environment for Tesla’s robotaxi program.
Musk confirmed that the company will begin unsupervised robotaxi trials in Austin, Texas but provided no details on how the service would operate or specifics on the pricing of its upcoming affordable electric vehicles (EV) models.
If gains hold, Tesla’s market value could increase by 28 billion dollars, reinforcing investor optimism.
The stock closed 2024 with a 62.5% gain, significantly outperforming traditional automakers like Ford, and currently trades at 118 times its 12-month forward earnings estimates.
At least 19 brokerages have raised Tesla’s price target, with a median target of $300, up from $278 in December.
“Tesla investors are fuelled by optimism around Full Self-Driving and the upcoming affordable model—two key catalysts that could drive Tesla’s next leg of growth,” says Matt Britzman, senior equity analyst at Hargreaves Lansdown.
Regulatory Uncertainty Remains a Major Challenge
While the robotaxi initiative is seen as a positive move, some analysts question the realism of Musk’s timeline due to strict regulatory barriers.
“Musk highlighted improvements in Tesla’s software, with planned rollouts in Texas and California, though regulatory barriers in Europe and data restrictions in China continue to slow progress,” states Mamta Valechha, consumer discretionary analyst at Quilter Cheviot.
In a sign of Tesla’s aggressive expansion strategy, the company has also raised its capital expenditure forecast to exceed 11 billion dollars annually for the next three fiscal years.
Despite the uncertainties surrounding regulation and execution, Tesla’s ambitious roadmap for affordable EVs and self-driving technology remains at the core of its long-term growth strategy.
