The company assures him that his difficulties are temporary. Tesla posted record profits in the fourth quarter of 2022 and saw its revenue climb 37% over the period to $24.3 billion. The group’s net profit soared by 59% to 3.7 billion, levels never reached before.
Over the whole of last year, its turnover jumped 51% to 81.5 billion dollars and its net profit 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.
Moreover, Tesla’s margins on the automotive business have fallen a little. “We know there are questions about the near-term impact of the uncertain macroeconomic environment, particularly with rising interest rates,” Tesla said in a statement. But the company “is used to challenges”. For now, it is “accelerating its cost reduction program and aiming for higher production rates”.
Some observers fear that the economic slowdown, the rise in interest rates, which makes it more expensive to buy a car on credit, and the arrival of multiple competitors on the market of electric vehicles, will slow down the development of Tesla .
Concerns around Elon Musk
In 2022, the company delivered 1.31 million electric vehicles, which represents a record and a jump of 40% over one year. But it had set itself the goal of increasing its deliveries in the long term by an average of 50% per year. On Wednesday, it was more vague about its outlook for 2023, saying it wanted to reach 1.8 million vehicles over the year without specifying whether it was delivery or production. During a conference call, Elon Musk assured that the company could produce 2 million vehicles if there are “no big disruptions in the supply chain or massive problems”.
Some analysts are also concerned to see the multi-entrepreneur fidgeting at the head of Twitter, the social network he bought at the end of October for 44 billion dollars, and not focusing as it should on Tesla. The billionaire responded to those criticisms by saying that thanks to his high number of followers on the platform, “Twitter is actually an incredibly effective tool” for advertising Tesla. The group’s share lost 65% in 2022, before recovering a little since the start of the year.
The effect of falling prices
To boost sales, the company has lowered its prices in recent months, first in China and then in Europe and the United States, sometimes by up to 20%. A decision considered by some analysts as necessary to defend its market share, by others as a sign of weakness. Tesla defended its position on Wednesday by saying that making its cars more accessible is “necessary to become a multi-million vehicle manufacturer.”
Customers reacted positively, orders since the beginning of January “having never been so important” over this period, assured Elon Musk. “We even raised the prices a bit,” he added.
VIDEO. “A loss of at least 10,000 euros”: they bought their Tesla before the sudden price drop
The manufacturer is also counting on the arrival on the market of its electric truck, Semi, the first model of which was delivered in December, and especially of its Cybertruck pick-up, whose production should begin “this summer” before going up in power in 2024, said Elon Musk. “The fact that the Cybertruck is on schedule is a very positive element,” said Garrett Nelson, analyst for CFRA. For him, the combination of the recent price drop and the fact that it makes Tesla eligible for tax credits in the United States “will boost demand and help reduce the prospects” of competitors.
After the conference call, the action was up 4.5% in electronic trading following the close of Wall Street.