Tesla’s Profit Jumped 12% in Fourth Quarter

Tesla reported Wednesday that the fourth quarter profit for 2022 was 12 percent higher than the prior quarter. This is a high point of a turbulent year, which saw intensifying competition and supply chain disruptions, as well as concerns over Elon Musk’s conduct.

Tesla reported that the quarter’s net profit was $3.7 billion. This is an increase of $3.3 billion from the previous quarter. For the full year, Tesla’s profit more than doubled to $12.6 billion from $5.5 billion in 2021. The year’s sales, which includes revenue from solar panels, rose to $81.5billion from $53.8billion the year before.

Tesla claimed it would produce 1.8 million cars by 2023, compared to 1.4 million in 2022. It would be a lower rate of growth than the 2022 production increase of nearly 50%.

It was an eventful year for Tesla dominated by Mr. Musk’s acquisition of TwitterTesla investors complained that he was not performing his duties at the automaker at a crucial time, leading to their resignation.

Mr. Musk “has essentially gone from a superhero with a red cape to a villain in the eyes of many investors after the ongoing Twitter fiasco has cast a dark shadow over Tesla’s stock,”
Daniel Ives is an analyst at Wedbush Securities. He made the comments in a note to investors prior to the earnings report.

Tesla sharesThe company’s performance during 2022 fell by 65 percent as investors doubted its ability to respond effectively to the long list of risks and challenges.

Investors worried about Mr. Musk’s plans to sell more of his Tesla stake to fund his Twitter acquisition. They worried about Tesla’s prospects in China, the world’s largest car market, because of problems maintaining the supply of critical parts and growing competition from rivals like the Chinese manufacturer BYD. BYD has surpassed Tesla in China’s total number of electric cars sold during 2022.

The slowing of the US economy and rising interest rates could also threaten to decrease the number who can afford Teslas. Fourth-quarter deliveries rose 18 percent, to 405,000 vehicles, the company said on Jan. 2, a lot less than Wall Street analysts had expected and short of Tesla’s own targets.

Tesla shares have recouped some losses in January, after the company slashed pricesTo revive sales, Tesla sold most of its electric cars in Europe as well as the United States. A Model 3 sedan, which is the most affordable Tesla model, has dropped in price to $44,000, before any government incentives.

The markdowns seem to have caused a surge of orders and helped to reassure investors that Tesla had plans to maintain its lead in electric cars. Tesla is now facing a bigger challenge from established car companies such as Hyundai Motor, Ford Motor and General Motors. They are selling more electric vehicles at lower prices and have a higher sales volume than Tesla.

While the price cuts helped to promote sales, they also took a toll on Tesla’s profit margin. The gross profit margin on vehicle sales dropped to 26 percent from 28 percent in Q3 and 31 percent during the fourth quarter in 2021.

Tesla stated Wednesday that production of its long-awaited Cybertruck would start by the end the year. Rivian, Ford and others have managed to outperform Tesla with their electric pickups after delays in unveiling the truck in 2019.

Tesla’s shares have risen by one-third since the beginning of January, though the stock price is still more than 60 percent below the high it set in November 2021.

Tesla earnings were one of the most closely followed numbers on Wall Street this Week. It remains the world’s most valuable car company by far and is growing much faster than more established automakers.