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Tesla stock rises in revenue: “Millions of fully self-driving cars can be sold at 100% gross margin”

Tesla ( TSLA ) reported mixed fourth-quarter results on Wednesday, topping earnings estimates while missing revenue views. Tesla shares rose on Wednesday, extending a sharp decline of more than 40% from bear market lows.


After a terrible 2022, in which Tesla stock plunged sharply in December, shares fell again to start 2023. However, Tesla has bounced since announcing major price cuts on Jan. 6 for vehicles in China, and continued to rise since announcing rate cuts in the U.S. and Europe. one week later.

Tesla shares rose more than 4% after hours. Shares rose 0.4% to 144.47 in Wednesday’s market trading, turning higher.

Tesla revenue

Estimate: Analysts had forecast earnings up 33% to $1.13 a share in the fourth quarter. At the end of December 2022, analysts were forecasting EPS of $1.25. Analysts had set the revenue target for 39% growth, to $24.67 billion.

Earnings: Tesla’s EPS rose 40% to $1.19, while revenue grew 37% to $24.32 billion in the fourth quarter.

For the full year, revenue rose 51% to $81.46 billion, missing estimates. Earnings rose 80% to $4.07 per share, beating Wall Street expectations.

Tesla had already announced that deliveries hit a record 405,278 in the fourth quarter. This missed reduced forecasts despite aggressive incentives at the turn of the year. Vehicle deliveries increased by 31% compared to a year earlier and almost 18% to 343,830 in Q3. Deliveries also increased by 40% to 1,313,851 in 2022. That was well below the company’s growth target of 50%.

Analysts had expected fourth-quarter Tesla deliveries of about 420,000, down significantly from higher estimates. Tesla’s Q3 deliveries had also fallen short.

Tesla production came in at 439,701 in the fourth quarter, outpacing deliveries by more than 34,000. In the 3rd quarter, production topped sales by just over 22,000. Tesla production came in at 439,701 in the fourth quarter, outpacing deliveries by more than 34,000. In the 3rd quarter, production topped sales by just over 22,000.

With increased production at the company’s factories in Berlin and Austin, Texas, Tesla’s total production capacity is now well over 450,000 in the quarter.

Tesla unit sales came in at 1,313,851 for 2022, up 40% compared to 2021, but short of the 50% target. The Model 3 sedan and Model Y crossover accounted for the vast majority of sales. The high-end Model S and X vehicles accounted for the rest.

Meanwhile, the Cybertruck is slated to arrive in 2023, which will be Tesla’s first new model since the Model Y launched in early 2020. The oft-delayed truck will begin “early production” in the middle of the year, according to CEO Elon Musk. Other reports say the Cybertruck will begin mass production in late 2023.

Tesla also began supplying its long-haul semi-trucks to PepsiCo (PEP) in December. It is unclear how many semi-trucks will be produced in 2023, with key prices and specifications still unclear. Tesla plans to build a $3.5 billion manufacturing facility in Northern Nevada for semi-trucks, according to the Nevada Independent.

On Wednesday, Tesla confirmed that production and delivery challenges through 2022 were “largely concentrated in China”.

Tesla plans to ramp up production volume “as quickly as possible” to match its 50% compound annual growth rate (CAGR) target. That goal goes back to 2021. For 2023, Tesla said it expects to produce about 1.8 million vehicles, a 37% increase over 2022.

The EV giant also said the Cybertruck “remains on track to enter production later this year.”

The company added that its next-generation vehicle platform is under development and that further details will be shared at Investor Day on March 1, 2023.

The Tesla share: Earnings come after price cut

Tesla’s Q4 earnings follow Tesla China EV registrations that bounce in the week of 5-16. January, after the last big price cuts. The latest registration numbers appear to reflect some benefit from Tesla’s Jan. 6 decision to cut prices in China.

Tesla cut prices for the Model 3 and Y in China, with the base Model 3 slashed by more than 13% to $33,570. Local media reports in China suggested that Tesla had received 30,000 orders within three days of the announced cuts, according to CnEVPost.

Tesla has also announced price cuts in the US and Europe. This will make several models eligible for tax incentives of $7,500 under the Inflation Reduction Act (IRA).

The electric car giant cut US Model 3 prices by 6-14%, depending on trim. A standard trim Model 3 RWD has been cut by $3,000 to $43,990. With the IRA tax credit applied to the vehicle, consumers who meet the income limits will pay $36,240.

The Performance Model 3 trim was cut by $9,000 to $53,990, coming in under the $55,000 limit for tax credits. Meanwhile, Tesla’s base Model Y has been reduced by $13,000, or nearly 20%, to $52,990, also below the tax credit limit. The performance variant of that vehicle has been cut to $56,990, also down $13,000.

Musk told investors on Wednesday that so far in January, Tesla has “seen the strongest orders so far this year than at any time in our history.” The Tesla boss said that orders are currently coming in at “almost twice the production rate” and that is resulting in increased Model Y prices.

“I think there’s just a large number of people who want to buy a Tesla car but can’t afford it. And so these price changes really make a difference to the average consumer,” Musk said.

“It’s always been our goal at Tesla to make cars that are affordable for as many people as possible, so I’m glad we’re able to do that,” he added.

Self-driving mode

Musk said during the earnings call on Wednesday that Tesla has deployed the Full Self Driving (FSD) Beta for city streets to approximately 400,000 customers in North America.

The EV giant is currently at about 100 million miles of FSD, not including highway driving, according to Musk.

“We wouldn’t have released the FSD Beta if the security statistics weren’t excellent,” Musk said.

The Tesla CEO added that almost all Tesla vehicles can currently have self-driving software uploaded to them.

“That means there are millions of cars with Full Self-Driving that can be sold at essentially 100% gross margin,” Musk said. “The value of the FSD grows as the autonomous capability grows, and when it becomes fully autonomous, it’s a value addition to the fleet that could be the largest asset value addition in history.”

Tesla shares

Tesla shares are up 43% since their Jan. 6 low of 101.81, touching the 50-day and 10-week lines.

This is despite the fact that a number of analysts have also weighted the Tesla share, cutting price targets and earnings estimates.

TSLA shares rank third in the Auto Manufacturers industry group. Tesla stock has a 46 Composite Rating out of 99. The stock has a 5 Relative Strength Rating, an exclusive IBD Stock Checkup gauge of stock price movements. The EPS rating is 75.

Follow Kit Norton on Twitter @KitNorton for more coverage.


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