The company assures him that his difficulties are temporary. Tesla reported record earnings in the fourth quarter of 2022, with revenue up 37% to $24.3 billion during the period. Group net income rose 59% to $3.7 billion, a never-before-seen level.
For all of last year, its turnover jumped 51% to $81.5 billion, while its net income more than doubled to $12.6 billion. This is enough to give the company confidence, despite growing doubts about the strength of demand for its electric vehicles.
What’s more, Tesla’s margins in the automotive business have fallen slightly. “We know there are questions about the short-term impact of an uncertain macroeconomic environment, especially with rising interest rates,” Tesla said in a statement. But the company is “accustomed to challenges.” For now, the company is “accelerating its cost reduction program and aiming to increase productivity.”
Some observers fear that the economic slowdown, rising interest rates that make it more expensive to buy a car on credit, and the emergence of many competitors in the electric car market will slow Tesla’s development.
Fears around Elon Musk
In 2022, the company delivered 1.31 million electric vehicles, a record and a 40% jump in a year. But it has set itself the goal of increasing its long-term deliveries by an average of 50% a year. On Wednesday, the company was more vague about its 2023 outlook, saying it wants to reach 1.8 million vehicles within a year, without specifying whether it’s delivery or production. During a conference call, Elon Musk assured that the company could produce 2 million cars if “there are no big disruptions in the supply chain or large-scale problems.”
It also worries some analysts that the multi-entrepreneur is fidgeting at the head of Twitter, the social network he bought in late October for $44 billion, rather than focusing properly on Tesla. The billionaire responded to these criticisms by stating that thanks to the large number of followers on the platform, “Twitter is actually an incredibly effective tool” for advertising Tesla. The group’s share lost 65% in 2022 and then recovered slightly since the beginning of the year.
Price drop effect
To boost sales, the company has slashed prices in recent months, first in China and then in Europe and the US, sometimes by as much as 20%. Some analysts see the move as necessary to protect their market share, while others see it as a sign of weakness. Tesla defended its position on Wednesday, saying making its cars more affordable is “necessary to become a multi-million dollar car manufacturer.”
Buyers reacted positively, orders from the beginning of January “have never been so important” in this period, Elon Musk assured. “We even raised prices a bit,” he added.
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The manufacturer is also looking to the market for its Semi electric truck, whose first model was delivered in December, and especially the Cybertruck pickup truck, which should begin production “this summer” before it reaches capacity. in 2024, said Elon Musk. “The fact that the Cybertruck is on schedule is a very positive thing,” said Garrett Nelson, CFRA analyst. The combination of the recent price drop and the fact that it makes Tesla eligible for tax credits in the United States, he said, “will increase demand and help diminish the prospects” of competitors.
After the conference call, shares in electronic trading rose 4.5% after Wall Street closed.