The stock of Tesla, a company that makes electric cars, is up a little bit after hours after the company reported better-than-expected quarterly earnings. Furthermore, the Cybertruck is expected to enter production later this year, the company said.
For the quarter, Tesla (TSLA) reported:
- Q4 Revenue: $24.32 billion vs. $24.07 billion (Est.)
- Q4 Adjusted EPS: $1.19 vs $1.12 (Est.)
That sum is an all-time high for Tesla, representing growth of over $2 billion from Q3 and almost $7 billion year-over-year.
Adjusted net income for Tesla came in at $4.1 billion, up nearly $400 million from the previous quarter and more than $1.3 billion from the same period last year. Musk and the company have declared they have “sufficient liquidity” to carry out their product development and production capacity expansion plans.
The overall gross margin was 23.8% (Estimated: 25.4%), with the automotive sector achieving a gross margin of 25.9% (Estimated: 28.2%). Tesla did lower prices in the United States, China (for the second time), and some European markets, but those reductions didn’t take effect until the first quarter of this year, so their effects aren’t reflected in Q4 results.
On the call, investors voiced concerns about demand, to which CEO Elon Musk responded by saying that recent price cuts had increased demand significantly. “So far in January, we’ve seen the strongest orders year to date in our history,” Musk said.
Tesla claims it can maintain profit margins despite declining ASPs (average selling prices) by employing “lower cost models, buildout of localized, more efficient factories, vehicle cost reduction, and operating leverage.” On the call, CFO Zack Kirkhorn stated that despite recent price cuts, Tesla anticipates maintaining automotive gross margins of 20%, which is significantly less than what Tesla reported in Q4.
Despite falling short in recent quarters, Tesla has maintained its long-term delivery target of 50% CAGR (compound annual growth rate). According to the company’s most recent quarterly report, “for 2023, we expect to remain ahead of the long-term 50% CAGR with around 1.8M cars for the year.”
Production and delivery problems for 2022, Tesla said, would be “largely concentrated in China,” but the company has been “running near full capacity for several months.” Tesla does not anticipate any significant volume increases from Giga Shanghai in the near future.
More information will be released at Tesla’s investor day on March 1. Tesla also announced that production of the Cybertruck will begin later this year and that its next-generation platform is currently in development. Musk has said, “Cybertruck will not be a significant contributor to the bottom line, but it will be next year.” Production of Cybertrucks, as Musk explained, will begin this summer, but mass production won’t begin until 2024.
