Tesla posts record earnings for the final quarter of 2022 but braces for more competition
Tesla posted record fourth-quarter net income on Wednesday last year as it predicted additional software-related gains will keep its margins higher than any other automaker.
The Austin, Texas-based electric vehicle and solar panel maker said it posted profits of $3.69 billion in October-December, beating analysts’ forecasts. The company’s profit was 59% higher than the same period last year.
Quarterly revenue was $24.32 billion, which fell short of analysts’ expectations of $24.67 billion.
“While every quarter is important for Tesla, we would highlight this … as one of the most important moments in Tesla history and for Musk himself,” Wedbush Securities analyst Dan Ives said of the highly anticipated earnings call.
“Having experienced unprecedented hypergrowth in the EV market in recent years, essentially created by Musk, Tesla now faces a darker macro in 2023 with fierce competition from all directions,” Ives said. “Adding to that backdrop is Musk, who has essentially gone from red-caped superhero to villain in the eyes of many investors after the ongoing Twitter fiasco cast a dark shadow over Tesla stock,” he added .
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On Jan. 13, the company slashed prices in the U.S. and China, its two largest markets, by as much as 20% on some models, leading many analysts to believe demand was slacking due to high prices, rising interest rates and competition from others Electric vehicles have declined makers.
Tesla said in its investor letter Wednesday that it will produce about 1.8 million vehicles this year, ahead of a projected 50% annual growth rate. But the forecasts section of the letter gave no estimate of shipments for the year. Previously, Tesla said its shipments would grow 50% annually for most years.
Morgan Stanley analyst Adam Jonas wrote in a note to investors early Wednesday that demand is a concern for the company. “In our view, the price cuts are actually a response to the slowdown in additional demand relative to additional supply,” he wrote.
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“Full self-driving” software
Tesla also said it rolled out its “Full Self-Driving” software to about 400,000 users and received $324 million from Full Self-Driving software during the quarter. Despite its name, “Full Self-Driving” cannot drive itself, and Tesla warns drivers that they must be ready to intervene at any time.
The company said it knows there are questions about macroeconomics as interest rates rise. “In the near term, we are accelerating our roadmap to reduce costs and strive for higher production rates while we remain focused on executing the next phase of our roadmap,” the letter reads.
Tesla shares are up as much as 3% in after-hours trading, indicating a positive investor reaction to the results.