US Tesla, profit margin declines above expectations in the fourth quarter | Reuters

[25日 ロイター] – US electric vehicle (EV) giant Tesla announced on the 25th that sales and profits exceeded market expectations in the fourth quarter of 2022. The number of vehicles delivered in the same quarter reached a record high, which contributed. However, the profit margin of the automobile business fell sharply.

US electric vehicle (EV) giant Tesla announced its fourth quarter financial results for 2022, with sales exceeding market expectations. Photo taken at the factory in Grünheide, Germany, in March last year (2023 REUTERS/Patrick Pleul/Pool via REUTERS/File Photo)

Revenue was $24.32 billion, beating analyst estimates of $24.16 billion in a Refinitiv survey.

Net income was $3.69 billion, or $1.07 per share, up from $2.32 billion, or $0.68 per share, in the same period last year. Adjusted earnings per share were $1.19, beating market expectations of $1.13.

The automobile business profit margin was 25.9%, the lowest level in the last two years.

The company offered significant discounts in major markets in the fourth quarter. Chief Executive Officer Elon Musk said in December that “rapid changes in interest rates” had an impact on all car purchases.

The goal of increasing deliveries by 50% in 2022 was not achieved. However, the company delivered a record 405,278 vehicles in the fourth quarter.

It expects deliveries to reach 1.8 million units this year, up 37% from the previous year. The growth rate will slow down from the previous year.

Musk said on a conference call with shareholders and analysts that the deep discounts had stimulated demand for Tesla cars, as the economic slowdown may lead to consumer disincentives.

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“The impact of the price hike on the average consumer is huge,” he said, adding that demand in January was about twice as large as production. If there is no turmoil in the external environment, sales in 2023 could reach 2 million units.

He said he expects a “pretty severe recession this year.” However, he said he expected demand for Tesla vehicles to remain strong, even though the overall auto market is expected to contract.

The company’s shares were up 5.3% in after-hours trading.

As for the Cybertruck pickup truck, it said it would not start mass production until next year.

Executives said they expect prices to remain relatively low, averaging $47,000, and profit margins in the auto business to remain in the 20% range. Mr. Musk said a recession was likely.

The company emphasized that it is “accelerating the cost reduction plan and working hard to improve the production rate” due to the uncertainty of the economy.

Tesla has outperformed the industry in recent years, weathering the coronavirus pandemic and global supply chain challenges better than others, and has posted record sales and profits.

“Tesla’s demand outlook is far more bullish than nearly every other automaker,” said Garrett Nelson, an analyst at CFRA Research. “Profit margins were slightly below expectations, likely due to inflation and higher raw material costs,” he said, adding that the company had a “strong” fourth-quarter results.

Further downward pressure on profit margins is expected due to the large discounts. Tesla had been repeatedly raising prices since the beginning of 2021, but in December last year, it made a complete turnaround and reduced prices in the United States. This month, the company has cut prices by as much as 20%.

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