Tesla Inc. has reported disappointing financial results, missing fourth-quarter earnings estimates and revealing that underlying financial quality remains weak despite record vehicle sales. The introduction of greenhouse gas credit sales and earnings from accounting changes, notably related to Bitcoin, masked the severity of the miss. Notably, automotive margins, excluding credits, dropped to their lowest point since 2018. The company’s aging vehicle lineup and slow production cost reductions have left it vulnerable amid increased competition and slowing sales growth, particularly in the U.S. and China, leading to reduced profits despite a significant rise in vehicle units sold.
Despite increasing vehicle and battery sales, Tesla's earnings miss highlights low-quality financials, driven by high emissions credit sales and falling vehicle margins.
Tesla’s vehicle production costs have only dropped by less than 2% per quarter over the last two years, leaving margins vulnerable in a growing price war.
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