Tesla reports record profit


At the end of a turbulent year, electric carmaker Tesla has had a mixed record: it delivered fewer vehicles than hoped for while doing so very profitably. For the final quarter, it reported net income of $3.7 billion after the market closed on Wednesday, and for the full year it was $12.6 billion, both of which are records. Tesla’s earnings per share exceeded analysts’ expectations. The share price was largely unchanged in after-hours trading. Tesla stock has lost 65 percent of its value over the past year. In the previous two years, the company was a stock market darling.

Tesla, once chronically in deficit, is now posting solid earnings quarter after quarter. Last year, however, the company missed its target of increasing the number of vehicles delivered by an average of 50 percent each year. In the end, it delivered 1.3 million cars, 40 percent more than in 2021. The goal is also unlikely to be achieved this year, Tesla predicts a production volume of 1.8 million vehicles. The car experts at Standard & Poor’s Global Mobility had actually expected Tesla to produce just over two million units. However, their forecast for the past year had already turned out to be too optimistic.

Stock market value still high despite price decline

The stock market value of Tesla, which has meanwhile already exceeded the one trillion dollar mark, depends on the claim of rapid growth, but is now only around 450 billion dollars. Of course, this is still far higher than the value of Volkswagen, BMW and Mercedes together (currently around 230 billion euros).

Many analysts see the drama surrounding CEO Elon Musk and his takeover of Twitter last year as the main reason for the poor price development. They see this as a distraction from his job at Tesla and also fear that he will alienate the electric car manufacturer’s customers with his increasingly provocative statements on the platform. According to a survey by market research group Morning Consult, the proportion of respondents who have a positive opinion of Tesla fell significantly between October alone, when the Twitter acquisition was completed, and November. Musk has also sold Tesla stock heavily to fund the $44 billion acquisition.

Beyond Musk’s Twitter adventures, Tesla has struggled with manufacturing difficulties of late, particularly at its Shanghai plant. Some observers also see a weakening on the demand side, which Musk has vehemently denied so far. In any case, Tesla has reduced its prices for its two top-selling models, the compact car Model 3 and the mid-range SUV Model Y, in many regions of the world in the past few weeks and months, in some cases significantly.

prices lowered

In Germany, for example, Tesla reduced the entry price for the cheapest variant of the Model 3 by around 13 percent to 43,990 euros. The Model Y, which is also manufactured in the German plant in Brandenburg, was reduced in price by almost 17 percent to 44,890 euros. It is now below the German price limit for the environmental bonus for 2024, which should be 45,000 euros. It is therefore not to be expected that the basic prices will be raised above the limit by 2024. Unlike some competitors, the delivery of a new Tesla does not currently take more than twelve months. On the website, where a new car can be bought directly with a credit card, delivery is promised between February and March 2023.

Tesla has also significantly reduced prices in China and on its American home market. In the US, Tesla buyers can take advantage of a $7,500 tax credit in addition to price cuts related to the recently enacted Inflation Reduction Act (IRA). The prices are now also cheap for sales to fleet operators such as car rental companies or car subscriptions for private customers, comments Ferdinand Dudenhöffer from the CAR Institute in Duisburg. Tesla can afford the price cuts because they recently achieved a large profit margin of 17 percent. However, the large margin only came about when Tesla continued to increase prices due to high demand and delivery delays due to a lack of chips.

competition from other manufacturers

It remains to be seen whether these price cuts will help boost sales, especially since the e-car pioneer is also facing ever greater competition. Competitors bring models that meet the needs of some buyers more with differentiation according to different market segments. Tesla, on the other hand, can only offer two models for the mass market so far, the Model S and the Model X are in the upper price segments.

The refresh of Tesla’s product range is progressing slowly. The youngest car, the Model Y, is almost three years old. This year, after some delay, the futuristic-looking pick-up truck “Cybertruck” is to be released. Tesla also said a new car platform was in development. Details are to be made public at an event for investors in March. In December, the company also delivered the first examples of its “Semi” truck. This week it announced that it intends to build its own factory in the US state of Nevada for the first time.



Source link -68