While the company has managed to continue increasing sales, achieving a record delivery of 1. 8 million electric cars in 2023, this has not translated into the same increase in profits, or even revenue. Although Tesla’s deliveries have increased, its profits have declined largely due to price cuts aimed at boosting sales and emerging prices similar to long-term products.
What’s more, Tesla cautions in the Q4 and annual earnings release it is currently “between two major growth waves.” While the Model Y and Model 3 have launched the company to greater success over the last few years, Tesla says the growth of its vehicle sales “may be notably lower” in 2024 as it prepares to launch a new vehicle platform on which it plans to build a smaller EV that costs around $25,000.
Shares fell 5. 8% to $195. 60 after the effects were released.
The smaller, less expensive electric vehicle will begin production in late 2025 at the company’s Texas plant, Chief Executive Officer Elon Musk said in a phone call on Wednesday, noting that it’s the only suitable place “because we want engineers to live on the line. “”
Production of the small electric vehicle will then be expanded to a yet-to-be-built plant in Mexico, according to Musk. Drew Baglino, the company’s senior vice president of propulsion and power systems engineering, later reiterated that the company “wants to first demonstrate the good fortune of the next-generation platform in Austin before starting construction” in Mexico. These comments recommend that construction of the Mexican plant begin until 2026.
Musk said the company plans to find by the end of 2024 a third factory outside of North America, where production of the smaller next-generation electric vehicle would eventually expand after Mexico.
There are “a lot of innovative new production technologies” contained in the new platform, Musk said.
Tesla reported a net source of income (on a GAAP basis) of $7. 9 billion in the fourth quarter, an unusually high figure that includes a one-time non-cash tax benefit of $5. 9 billion from the release of valuation allocation on certain deferred tax assets. .
The Company’s operating source of revenue and profit on an adjusted basis provides a clearer picture of its monetary performance.
Tesla reported an operating profit of $2. 06 billion in the fourth quarter, down 47% from the same time last year. These effects were negatively impacted through an accumulation of operating expenses largely due to AI and other R projects.
On the plus side, Tesla said it benefited from a lower per-vehicle rate, adding the raw materials rate, the Inflation Reduction Act credit, and the increase in vehicle deliveries, which contributed to the earnings gap.
On an adjusted basis, the company earned $3. 9 billion, down 27% from the same year last year.
Tesla managed to regain some of its leading margins in the auto industry in the fourth quarter, thanks in part to its efforts to raise costs.
The company’s automotive gross margin, regulatory credits, was 17. 2%. This is the first quarterly increase since Tesla began slashing its costs last year. But Tesla also said in the report that it is reaching the “natural limit” of cutting costs from existing vehicles. “Over time, we expect our hardware-related gains to be accompanied by an acceleration in artificial intelligence, software, and fleet-based profits,” the company wrote.
Revenue continued to grow, albeit at a slower pace than Tesla’s in the past.
The company said it generated $25.17 billion revenue in Q4, a 3% increase from the same quarter last year. The results just barely missed analysts’ expectations. Analysts had expected the company to earn around $25.62 billion in revenue in the fourth quarter of 2023, according to Yahoo Finance data.
While Tesla is wary of vehicle expansion in 2024, the company remains optimistic about expanding its electric garage business. Storage deployments increased 125% year-over-year, even with a slower fourth quarter.
It fits a facet of Tesla’s business that the company will begin releasing launch numbers as well as its typical quarterly vehicle production and delivery reports, Baglino said on the call.
“I’ve been saying for many years that the shop shop industry would grow much faster than the auto sector, and that’s what it’s doing,” Musk said.