Either You Believe Elon Musk Or You Don’t

It’s been a while since I’ve done a specifically Tesla- or Elon Musk-centered Morning Dump so I feel like I’m owed one. Elon Musk did another earnings call and, while the present is mixed, he made some big promises about the future. That’s what he does. He makes big promises and fulfills some of them. The promises are big enough that it only takes a few hits, though, to make him the richest person in the world.

Toyota is decently well-off as well, and a small slide wasn’t big enough to prevent the company from being the biggest one in the world again. How’d it do it? Hybrids, of course. Jaguar Land Rover is a little worse off as well, with profits falling in Q4 of 2024. Blame the pound.

One thing that might impact sales here in the United States is the Fed’s decision to not lower interest rates, meaning that pressure will still remain on auto loans for the near term.

‘You Can’t Be A Toddler Forever, They Grow Up’ – Elon Musk

Tesla released its Q4 and full-year financials and, mostly as expected, the company’s numbers were down. The expectation from the market was that Tesla earned $27.26 billion in revenue at the end of last year and that the company’s earnings per share (eps) would hit $0.76. Instead, the company made just $25.71 billion, up slightly from last year, with an eps of $0.73 cents.

Again, not a huge surprise here, as the company tried to maintain sales with a mix of older models and, unsurprisingly, net income dropped along with increased incentive spending. At the same time, Elon Musk has made investing in AI and other projects a big priority, so his company has been spending a ton of money. Tesla is not a car company in Musk’s view, it’s a technology company that makes cars.

Will shares suffer due to this miss? Probably not! It doesn’t seem like people buy Tesla based on underlying business fundamentals (you might notice, for instance, that a big chunk of income came from selling regulatory credits) but, instead, on what Musk says he will do. Musk said a lot of things. Lewin already wrote about Tesla’s plans to roll out some form of driverless taxi service in Austin this year. That’ll definitely help when your drunk idiot friends get you kicked out of The Ranch and you have to slink off to Coyote Ugly.

What else? Elon Musk said in October at the last one of these that it would be “silly” and “pointless” to build the rumored $25,000 Tesla. People keep asking about the car and CFO Vaibhav Taneja gave a sort of answer to that:

We are still on track to launch a more affordable model in the first half of 2025 and will continue to expand our lineup from there. From a dollar-for-dollar basis, we believe we have the most compelling lineup today compared to the industry, and it will continue to get better from here.

That’s something.

The big news is that Musk thinks that there’s a path where Tesla will become the most valuable company in the world, many times over. Here’s the quote, via The Motley Fool’s transcript:

I see a path. I’m not saying it’s an easy path but I see a path of Tesla being the most valuable company in the world by far. Not even close, like maybe several times more than — I mean, there is a path where Tesla is worth more than the next top five companies combined. There’s a path to that.

I mean, I think it’s like…a difficult path but it is an achievable path. And that is overwhelmingly due to autonomous vehicles and autonomous humanoid robots. So, our focus is actually building toward that. And then that’s where we’re laying the ground.

We laid the groundwork for that in 2024. We’ll continue to lay the groundwork for that in 2025. In fact, more than laying the groundwork, actually started building the structure. We’re building the manufacturing lines.

What does this mean? AI. Robots. FSD. Seriously, he’s big on FSD. Were you aware?

And I’d like — setting up for what I think will be an epic 2026 and a ridiculous ’27 and ’28, ridiculously good. That is my prediction. As you very few people understand the value of self-driving and our ability to monetize the fleet. Some of these things I’ve said for quite a long time, and I know people have said, “Well, Elon, the boy who cried like a wolf like several times.” But I’m telling you, there’s a damn wolf this time and you can drive it.

In fact, it could drive you. It’s a self-driving wolf. For a lot of people, like their experience of Tesla Autonomy is like if it’s even a year old, if it’s even two years old, it’s like meeting someone when they’re like a toddler and thinking that they’re going to be a toddler forever. But obviously not going to be a toddler forever.

They grow up. But if their last experience was like, “Oh, FSD was a toddler.” It’s like, well, it’s grown up now. Have you seen it? It’s like walks and talks. And that’s really what we’ve got.

I do appreciate that Musk here is at least conscious that he makes all these promises all the time. Just think of all the people who are still sitting on $50,000 deposits for a Roadster something like seven years later.

That’s just the way Musk works and, in the interim, he’s managed to make EVs profitably (which few have done), launched a bunch of rockets into space, and become best friends with the President. For better or worse, if you invest in Tesla you’re investing in the idea that Elon Musk’s management style and vision is eventually achievable. If Tesla becomes more valuable than the next five companies then a $400 share price is extremely low and buying more makes sense. Even if he’s not the Lisan al-Gaib are you really going to be mad if Tesla is only worth as much as the next four companies?

Up to this point, depending on when you got in as a Tesla investor, believing Elon Musk has likely paid off quite well.

Toyota Is Still The King Thanks To Hybrids

The new Prius looks so good, right? The new Prii are unbelievable.

Last year, Toyota’s deliveries were down 3.7% globally if you throw in subsidiaries Hino and Daihatsu, reaching just 10.82 million in 2024. That still means Toyota is the king, having sold about a million more cars than Volkswagen, which dropped to just 9.03 million vehicles delivered last year.

The company can’t seem to build cars fast enough for the United States, and at least part of that decline is attributable to the fact that Tesla got hit with a bunch of recalls and stop-sales in North America. A massive certification scandal in Japan also didn’t help.

What Toyota did well, according to Automotive News, is sell a crap ton of hybrids:

Gasoline-electric hybrids comprised 43 percent of Toyota’s parent-company global volume, up from 34 percent in 2023. Battery-electric vehicles, by contrast, still barely registered. Global BEV sales climbed 35 percent, but only amounted to 139,892 vehicles, or about 1.3 percent of Toyota’s worldwide volume.

“In North America, the lineup of electrified vehicles has been increasing,” a Toyota spokesperson said while announcing the figures Jan. 30 in Tokyo. “In addition to growing environmental awareness, demand among consumers in North America has shifted from gasoline-powered vehicles to purchasing hybrid vehicles,” the spokesperson said.

That tracks.

Jaguar Land Rover Also Missed Estimates

It’s a strange moment for the Tata-owned Jaguar Land Rover. The Land Rover part of the equation continues to deliver high margins from mostly gas-powered trucks while Jaguar has basically stopped building cars in order to prep for a new, more premium EV future.

The company’s Q3 25 (but Q4 24 by the calendar) was, eh, not great. Profits fell about 17%, though margins were pretty good with a pre-tax margin of 9.0%. Why the profit loss then?

The increase in profitability year‑on‑year reflects higher volumes, improved mix and a reduction in depreciation and amortisation (D&A) driven by Castle Bromwich production cessation and ICE end of life extensions, partially offset by an increase in VME, warranty costs and unfavourable FX revaluation.

One of the downsides of reporting your earnings in pounds is that the pound is way down to the dollar, which is a situation that’s likely not to change anytime soon.

Fed Keeps Rates Steady, Which Isn’t Great For Car Buyers

This time last year the US Federal Reserve Bank (the Fed) was coming off of a couple of good quarters of inflation dropping and the assumption was that rate cuts might be coming in the summer. And then inflation didn’t drop and so the rate decrease got pushed into the second half of 2024.

History is repeating itself because that’s basically what happened at the start of this year as the Fed’s chairman Jerome Powell said the central bank isn’t going to move rates yet.

Per CNBC:

In their news release announcing the decision — which analysts typically parse for signs of the path ahead — Fed officials struck a more cautious tone on inflation. They removed part of a line in their previous release saying inflation “has made progress toward” a goal of 2%, noting in Wednesday’s statement only that it “remains somewhat elevated.”

Powell said at a news conference after the announcement that recent inflation data looked “good” but that “we’re not going to over-interpret two good or two bad [inflation] readings.”

While access to credit for car buyers is improving, slowly, a rate cut probably wouldn’t have hurt. Other factors, such as delinquencies, are also helping keep rates up.

What I’m Listening To While Writing TMD

You knew it was coming. Famed war videographer Don Johnson is looking for a”Heartbeat.” Any guesses what I’m going to do tomorrow?

The Big Question

Will any company knock Toyota off as the biggest carmaker in the world? Which company and when?

Top photo: Tesla/Depositphotos.com