Tesla has reported its earnings for the fourth quarter of 2022 and the results are in. The electric vehicle maker has beaten expectations on both earnings and revenue, with shares rising more than five percent. CEO Elon Musk even hinted that the company might be able to produce 2 million cars this year.
The adjusted earnings for the quarter were $1.19 per share, compared to the expected $1.13 per share according to Refinitiv. Revenue also exceeded expectations, coming in at $24.32 billion compared to the expected $24.16 billion. In comparison, the year-ago quarter saw Tesla posted revenue of $17.72 billion along with adjusted earnings of $2.52 per share ($0.85 adjusted for an August 2022 stock split).
The automotive sector of Tesla saw significant growth, with revenue of $21.3 billion in the fourth quarter, representing a 33% increase year-over-year. $467 million of that came from regulatory credits in the fourth quarter of 2022, a near 50% increase from the prior year in the same period.
However, the company’s automotive gross margins were at 25.9%, which was at the lowest point in the last five quarters. Operating cash flow was also down 29% from last year and down 36% from last quarter, coming in at $3.28 billion.
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Tesla acknowledged in a shareholder deck that average sales prices have “generally been on a downward trajectory for many years,” and stated that “affordability” would be necessary for Tesla to grow into a company that sells multiple millions of cars annually. This is likely in reference to the price cuts on Tesla cars around the world in late 2022 and this year, which upset customers in the U.S. and China who recently purchased new Teslas at higher prices and triggered a decline in used Tesla prices in the U.S.
Despite these cuts, it seems that they have sparked demand. In a call with shareholders and analysts on Wednesday, Musk said, “Thus far in January we’ve seen the strongest orders year-to-date than ever in our history. At present, we are having orders of almost double the size of the rate of production.”
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After ramping up production at its new plants, Musk was questioned why Tesla’s prediction for manufacturing in 2023 was only 1.8 million units. He said, “We’re saying 1.8 because there consistently appears to be some friggin’ force majeure thing that happens at some places on Earth. The occurrence of tsunamis, earthquakes, wars, pandemics, etc. is beyond our control. We have the capacity to produce 2 million cars this year if all goes according to plan and there are no major supply chain disruptions or major issues. That would also likely be in demand, in my opinion.
Although it did not provide any new forecast, the business stated in its results announcement that it was still aiming to increase output as soon as feasible in line with the 50% compound annual growth rate that it had been guiding to since early 2021.
Investors also questioned Musk about his intentions for protecting Tesla’s image and brand from any negative press stemming from his political opinions and his new position as CEO of Twitter, the social media platform he purchased in October 2022. Musk said, “I’ve got 127 million followers,” and praised Twitter as a terrific platform for connecting with consumers. And it keeps expanding quickly. That implies that I enjoy a fair amount of popularity. I might not be well-liked by everyone. However, the number of followers speaks for itself for the great majority of individuals. I probably have one of the most active social media profiles in the whole globe, at least on Twitter.
