Tesla Buoys Investors With Growth Pledge, Robotaxi Rollout

(Bloomberg) -- Tesla Inc. plans to launch a long-promised robotaxi business and get back to growing vehicle sales after a year of decline in both deliveries and earnings.

The carmaker expects to start offering a paid service in June to use self-driving Teslas that won’t rely on humans supervising the steering wheel, Chief Executive Officer Elon Musk said Wednesday. The company’s shares shook off an initial drop in reaction to quarterly profit that missed estimates, rising as much as 4.1% before the start of regular trading Thursday.

Musk, 53, largely avoided discussing fourth quarter and full-year results, instead lauding advancements he said Tesla is making in autonomy, humanoid robots and artificial intelligence. While his chief financial officer cautioned the company will lose several weeks of production this quarter of its top-selling vehicle, the Model Y, the CEO predicted an “epic” 2026, followed by a “ridiculously good” following two years.

“Q4 results weren’t great, but who cares? Elon has never sounded so bullish,” Alexander Potter, an analyst at Piper Sandler who has the equivalent of a buy rating on Tesla’s stock, wrote in a report.

Tesla shares already have climbed more than 80% since the company last reported earnings, highlighting how investors are looking past financial results and viewing the stock as a means to invest in the prospects of Musk. The world’s richest man donated more than $250 million to support the election of Donald Trump and other Republican causes, which yielded a prime position as one of the president’s top advisers.

Musk and his executive team offered no new details on the more affordable models they’ve said Tesla is preparing to launch in the first half of this year. The company is expected to need fresh product to boost sales after failing to deliver enough vehicles in the fourth quarter to avoid its first annual decline in more than a decade.

Musk mostly steered clear of US politics, a marked change from past earnings calls that waded into issues including inflation and industrial policy under the Biden administration. Tesla CFO Vaibhav Taneja, on the other hand, did warn that Tesla could be vulnerable if Trump follows through with his various threats to wage trade wars.

“The imposition of tariffs, which is very likely, will have an impact on our business and our profitability,” Taneja said, without elaborating.

Musk’s Politics

Minutes before the earnings call started, Musk was rapid-fire posting on X, his social media service, about Trump’s recent moves to cut the federal workforce and deport undocumented immigrants. Musk started back up again minutes after the webcast ended with a post about Trump’s executive order cutting federal funding for K-12 schools that teach topics related to race, sex, gender or politics.

Tesla executives meanwhile didn’t discuss Trump’s order for his administration to consider eliminating subsidies and other policies that favor electric vehicles, including tax credits supporting EV purchases. The company generated more revenue than ever last year from helping other automakers meet emissions standards, a segment of its business that could be at risk in the US as Trump vows to ease those rules.

Musk said Tesla will start offering “unsupervised Full Self-Driving,” or FSD, in Austin, adding he’s confident the service will roll out in California and “many regions” of the US by the end of this year.

Related: Tesla Sounds Out Austin Officials About Driverless Fleets

Tesla previously said in October it aimed to launch both unsupervised FSD and autonomous ride-hailing in California and Texas this year. Musk told analysts Wednesday that the only constraint he sees for the technology next year is regulation.

Self-Driving Hurdles

Tesla has long sold a suite of features it’s called FSD that require constant driver supervision and don’t make its vehicles autonomous. Musk has a track record of blowing past product timelines, particularly for self-driving technology.

Autonomous vehicles face a number of regulatory hurdles. Tesla’s Cybercab, a car lacking pedals or a steering wheel that the company expects to produce next year, would require an exemption from existing US safety standards to be allowed on US roads. Under existing rules, that permission would apply to a limit of just 2,500 vehicles per year.

States also have their own patchwork of rules for autonomous vehicles, including California, where Tesla has a permit to test them with a driver. The state could be a more challenging environment than places such as Texas, which has fewer hurdles.

Musk has called for policy changes including a national approval process for autonomous vehicles.

Tesla has given little detail on how it aims to roll out a robotaxi service. The Texas Department of Licensing and Regulation doesn’t currently list Tesla as a ride-share licensee. Musk said Tesla wants the service to be “way safer” than human drivers.

Lower Bar

Garrett Nelson, an analyst with CFRA, said Tesla’s vaguer outlook for vehicle sales growth this year resonated with investors as more realistic than Musk’s earlier pledge for growth of as much as 30%.

“The bar has been lowered to much more achievable levels, so therefore they are much more likely to hit it going forward,” Nelson said.

He added that Musk’s relationship with Trump is also seen as a positive as Tesla focuses on autonomy and the potential for changes to federal regulations.

“Musk has the president’s ear,” Nelson said. “He’s going to have a major place at the table as far as what the regulatory framework looks like — and we think it will be favorable to Tesla.”

(Updates with early share move in the second paragraph, analyst’s comment in the fourth paragraph.)

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