Tesla reported fourth-quarter earnings on Wednesday that missed Wall Street expectations, with earnings per share of $0.73 versus estimates of $0.75, and revenue of $25.7 billion compared to expectations of $27.2 billion. Despite the miss, Tesla shares rose over 3% in volatile after-hours trading, ultimately climbing 4.3% by the call’s end, driven by major AI-related announcements from CEO Elon Musk.
The most significant news came during the earnings call when Musk announced that paid rides for Tesla’s unsupervised full-self-driving (FSD) robotaxi service are expected to launch in June in Austin, Texas. The service will initially be operated by Tesla’s own fleet as the company takes a cautious approach with “public safety top of mind.” Musk indicated the service would expand to California by year-end and “everywhere in North America next year,” with Tesla owners able to add their personal vehicles to the robotaxi fleet sometime in 2026.
Wall Street analysts had been particularly bullish heading into the results, with growing excitement around Tesla’s AI capabilities and autonomous driving technology. The company’s AI ambitions appear central to its future strategy, with Musk emphasizing that Tesla is “making rapid progress” on “real-world AI” with week-over-week improvements.
Tesla also provided updates on its Optimus humanoid robot, another AI-driven product line that Musk considers vital to the company’s future valuation. Musk stated the robot’s design is “rapidly evolving” and “not design locked,” giving a “very rough guess” that Tesla would begin delivering Optimus robots to other companies in the second half of 2026. He projected that once production reaches a steady state above one million units annually, the manufacturing cost would drop below $20,000 per robot.
Regarding traditional vehicle sales, Tesla experienced its first year-over-year decline in 2024 but expects a return to growth in 2025, contingent on “the rate of acceleration of our autonomy efforts.” The company achieved a record low cost of goods sold per vehicle at under $35,000, driven by improvements in raw material costs. Tesla CFO Vaibhav Taneja noted that tariffs under the Trump administration were “pretty likely” and would impact profitability, despite efforts to localize supply chains.
On the technology front, Musk reiterated his opposition to LIDAR technology, stating that cameras combined with Tesla’s neural networks are the correct solution for autonomous driving. He emphasized that the road system was “designed for an optical neural net” and compared human vision to Tesla’s camera-based approach. Musk also highlighted a truck driver shortage as creating a “several billion dollar a year opportunity” for autonomous vehicle technology.
Key Quotes
I’m confident that we will release unsupervised FSD in California this year
Elon Musk made this statement during the earnings call when addressing retail investor questions about the robotaxi timeline. This commitment represents a major milestone for Tesla’s AI-powered autonomous driving technology and signals the company’s confidence in its full-self-driving capabilities reaching commercial deployment.
We have too much talent in law and engineering, law and finance in America. And there should be more of that talent in manufacturing.
Musk emphasized the need to shift American talent toward manufacturing and AI development, reflecting his broader vision that combines advanced AI technology with scaled production capabilities. This statement underscores Tesla’s competitive advantage in both AI software and manufacturing execution.
For Optimus, we are designing the train and the station in real time, while also building the tracks.
Musk used this metaphor to describe the complexity and uncertainty around the Optimus humanoid robot timeline. The statement highlights the cutting-edge nature of Tesla’s AI robotics work, where the company is simultaneously developing the AI technology, hardware design, and manufacturing processes.
Humans drive without shooting lasers out of their eyes, unless you’re Superman. The road system was designed for an optical neural net.
Musk defended Tesla’s camera-based approach to autonomous driving over LIDAR technology, emphasizing that Tesla’s AI neural networks paired with cameras better replicate human vision. This philosophical approach to AI-powered autonomy differentiates Tesla from competitors and reflects confidence in vision-based AI systems.
Our Take
Tesla’s earnings call reveals a company betting its future on AI technology rather than traditional automotive metrics. While the revenue miss might concern some investors, the market’s positive reaction suggests Wall Street is valuing Tesla increasingly as an AI company rather than just an EV manufacturer. The June robotaxi launch represents a critical test of whether Tesla’s AI-first approach can deliver on years of promises. What’s particularly noteworthy is Musk’s emphasis on “real-world AI” and the company’s integrated approach combining AI software, custom silicon, and manufacturing scale—a combination few competitors can match. The Optimus robot timeline, while uncertain, demonstrates Tesla’s ambition to become a broader AI and robotics company. However, the regulatory and safety challenges ahead shouldn’t be underestimated, and Tesla’s ability to execute on these AI promises will determine whether its premium valuation is justified.
Why This Matters
This earnings report represents a pivotal moment in the commercialization of AI-powered autonomous vehicles, with Tesla becoming the first major automaker to announce a specific timeline for paid, unsupervised robotaxi services. The June launch date in Austin marks a significant milestone in the race toward fully autonomous transportation, potentially validating years of AI research and development investment.
The announcement has broader implications for the AI industry beyond automotive applications. Tesla’s approach to “real-world AI” using vision-based neural networks rather than LIDAR demonstrates an alternative path to autonomy that could influence how other companies develop AI systems. Additionally, the Optimus humanoid robot initiative signals Tesla’s ambition to apply its AI capabilities to general-purpose robotics, potentially disrupting manufacturing and logistics industries.
For workers, particularly in transportation sectors, Tesla’s autonomous vehicle timeline accelerates questions about AI’s impact on employment. Musk’s comments about the truck driver shortage suggest autonomous technology could address labor gaps, though this raises concerns about workforce displacement. The projected sub-$20,000 manufacturing cost for Optimus robots could similarly transform labor economics across multiple industries, making this a critical development for understanding AI’s societal impact.
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