- Tesla reported a 39% drop in quarterly profit, as it slashed prices and offered incentives to boost demand for its electric vehicles amid rising competition and supply chain challenges.
- Tesla’s gross margin fell to 17.6% in the fourth quarter, down from 23.8% a year ago and below analysts’ expectations of 18.3%. The company also warned of slower sales growth in 2024, as it works on launching a new vehicle at its Texas factory.
- Tesla’s revenue rose 3% to $25.17 billion, missing analysts’ estimates of $25.62 billion. The company delivered a record 484,507 vehicles in the quarter and 1.8 million for the full year, meeting its target.
Why it matters: Tesla is facing increasing pressure from rivals, regulators, and customers, as it tries to maintain its leadership in the electric vehicle market. The company has been cutting prices to attract more buyers, but this has hurt its profitability and brand image.
The big picture: Tesla has been investing heavily in expanding its production capacity, developing new technologies, and entering new markets. The company has also been dealing with supply chain disruptions, labor shortages, and quality issues, which have affected its operations and customer satisfaction.
By the numbers:
- Tesla’s net income was $2.49 billion, or 71 cents per share, excluding one-time items, compared with $4.08 billion, or $1.16 per share, a year earlier. Analysts on average expected 73 cents per share, according to LSEG data.
- Tesla’s operating expenses rose 22% to $3.54 billion, as it spent more on research and development, sales and marketing, and general and administrative costs.
- Tesla’s free cash flow was $1.63 billion, down from $2.79 billion a year ago.
What they’re saying:
- “We are seeing strong demand for our products, but we are also facing significant challenges in our supply chain and logistics. We are working hard to overcome these issues and deliver our next-generation vehicle as soon as possible,” said Elon Musk, CEO of Tesla, in a statement.
- “Tesla’s results were disappointing, as the company failed to meet the high expectations of the market. Tesla’s margins are under pressure from price cuts and rising costs, and its growth outlook is uncertain due to competition and regulatory hurdles,” said David Whiston, senior equity analyst at Morningstar, in a note.
- “Tesla’s results were impressive, given the difficult environment it operates in. Tesla’s sales and deliveries were strong, and its cash flow was positive. Tesla’s margins are still healthy, and its growth potential is enormous, as it launches new products and enters new regions,” said Dan Ives, managing director at Wedbush Securities, in a note.
What’s next: Tesla is expected to face more challenges and opportunities in 2024, as it ramps up the production and delivery of its new vehicle, the Cybertruck, and expands its presence in China, Europe, and India. Tesla is also expected to launch its full self-driving software, which could boost its revenue and competitive edge.
