Jefferies: Elon Musk delivered 'most interesting earnings call in many quarters'

Investing.com -- Tesla’s fourth-quarter update offered stronger margins and cash generation, but Jefferies said the real story was an earnings call that ranked as the company’s “most interesting” in many quarters, driven by sweeping investment plans and major strategic pivots.

Jefferies analyst Houchois highlighted that Tesla delivered a “healthy beat on core auto margin and cash,” with group gross profit of $5 billion and a 20.1% margin, far above consensus.

Auto margins also improved, rising to 17.9%, the best since late 2023, helped by lower vehicle costs and a favorable regional mix. Free cash flow came in at $1.42 billion, with Tesla’s cash pile growing to $44.1 billion.

But Houchois said the outlook was “vague and low in numbers,” overshadowed by what it called a “whopping $20bn capex for 2026 and beyond” across six business areas, including new battery capacity, AI infrastructure, Cybercab, the Semitruck and Optimus.

The firm warned that “multiple launch milestones [are] likely to be missed,” risking pressure on earnings, and noted that “funding may become a topic despite a $44bn cash pile.”

The call is also said to have revealed Tesla will discontinue the Model X in the second quarter to redirect resources toward Optimus production and next-generation autonomous offerings.

Jefferies stated Musk’s renewed focus on robotaxis and Mobility-as-a-Service left timelines “vague,” including his assertion that one-quarter to one-half of the U.S. could be robotaxi-covered by year-end, “depending on permitting.”

Houchois added that Tesla’s investment in xAI may signal that meeting Musk’s “supercompensation targets may rely on Musk-related corporate deals,” raising questions about governance and valuation.

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