Tesla stock (TSLA) experienced a sharp drop of more than 12% on Thursday following the company's fourth quarter earnings report, which fell short of estimates and provided a downbeat full-year production outlook. The electric vehicle (EV) giant reported top line revenue of $25.17 billion for the fourth quarter, slightly below the expected $25.87 billion. Despite a 3% increase from the previous year, Tesla's adjusted earnings per share (EPS) of $0.71 also missed the estimated $0.73.

Moreover, Tesla's adjusted net income of $2.48 billion fell short of the $2.61 billion expected by analysts. The company attributed the lower-than-anticipated results to potential downward pressure on margins due to cost-cutting efforts initiated late in 2022.

In terms of full-year production, Tesla indicated that it might not achieve the projected 2.19 million vehicle deliveries for 2024, which represents a 21% increase from 2023. The company cited its teams' focus on launching the next-generation vehicle at Gigafactory Texas, causing the growth rate to potentially be notably lower than that achieved in 2023. CEO Elon Musk confirmed that the highly anticipated next-gen vehicle is set to be unveiled in the second half of 2025.

During the earnings call, Musk emphasized the progress made on Tesla's next-generation manufacturing platform. The company aims to revolutionize vehicle manufacturing with this advanced system. Musk described their next-gen low-cost vehicle as "far more advanced than any other in the world," expressing enthusiasm for its scheduled production in the second half of 2025.

Furthermore, recent developments, including Hertz shedding EVs from its rental car fleet, Tesla reducing prices in China, a temporary production halt in Berlin, and Musk's request for more stock, have weighed on Tesla's profitability and investor sentiment.

Despite these challenges, Tesla's Q4 delivery figures exhibited strength, with 484,507 deliveries reported, surpassing Bloomberg's Street estimates of 483,173. This record-breaking quarter marked a significant increase from the previous record of 466,000 deliveries in Q2 of 2021. For the full year, Tesla delivered 1.81 million vehicles, representing a 38% year-over-year growth. Production also rose by 35% to 1.85 million units.

Notably, no specific figures were provided for Cybertruck deliveries in the Q4 update, although Musk reiterated the impressive demand and acknowledged a longer production ramp-up compared to other models.

In addition to these updates, Musk addressed concerns regarding his future influence on the company. He expressed a need for greater control to ensure Tesla's success in its ambitious AI endeavors. Musk voiced worries about losing control to major shareholders or activist groups. He emphasized his desire to remain an effective steward of Tesla's powerful technology, rather than seeking additional economic benefits.

Tesla's disappointing Q4 earnings and cautious production outlook have resulted in significant market volatility, with investors closely monitoring the company's strategic plans and progress on next-generation vehicles.