Tesla (TSLA) earnings This autumn 2022

Tesla founder Elon Musk attends Offshore Northern Seas 2022 in Stavanger, Norway on August 29, 2022.

Carina Johannsen | NTB | via Reuters

Electric Vehicle Manufacturers Tesla reported earnings after the bell, which surpassed both receipts and receipts. Shares rose more than 5% in hours after CEO Elon Musk said the company could potentially produce 2 million cars this year. Here are the results.

  • merits (adjusted): $1.19 vs. $1.13 per expected share, per Refinitiv
  • revenue: $24.32 billion vs. $24.16 billion expected, per Refinitiv

In the year-ago quarter, Tesla reported revenue of $17.72 billion and adjusted earnings per share of $2.52 ($0.85 adjusting for a stock split in August 2022).

Tesla reported fourth-quarter automotive sales of $21.3 billion, up 33% year over year. Of that, $467 million came from regulatory borrowings in the fourth quarter of 2022, up nearly half from the same period last year.

Auto gross margins came in at 25.9%, the lowest in the last five quarters. Operating cash flow was down 29% year over year and 36% from the most recent quarter and was $3.28 billion.

In a shareholder deck, the company acknowledged that average selling prices “have generally been on a downward trend for many years,” and said that “affordability” would be necessary for Tesla to grow into a company that sells several million cars annually.

In late 2022 and this year, Tesla lowered the prices of its cars around the world, angering customers in the US and China who were recently buying new Teslas at higher prices, and triggering an immediate drop in used Tesla prices in the US as well.

However, the price cuts seem to have boosted demand. Speaking to shareholders and analysts on Wednesday, CEO Elon Musk said: “So far in January, we’ve seen the strongest year-to-date orders than ever in our history. We are currently seeing almost twice as many production orders.”

An analyst asked Musk why Tesla’s 2023 production forecast was only 1.8 million after the company ramped up production at its new factories.

Musk replied, “We say 1.8 because there always seems to be some force majeure somewhere on Earth. We have no control over whether there are earthquakes, tsunamis, wars, pandemics, etc. If it’s a smooth year, without a major supply chain disruption or a massive problem, we have the potential to make 2 million cars this year. I think there would also be a demand for it.”

The company didn’t release any new guidance, but reiterated in its earnings release, “We plan to ramp up production as quickly as possible, in line with the 50% compound annual growth rate target we were targeting in early 2021.”

Shareholders asked a question about how Musk plans to protect Tesla’s brand and reputation from backlash stemming from his political statements and his new job as CEO of Twitter, the social media company he founded in October acquired in 2022. Musk responded by touting Twitter as a great way to connect with customers:

“I have 127 million followers. And it continues to grow rapidly. That suggests I’m pretty popular. I may not be popular with some people. But for the vast majority of people, the number of followers speaks for itself. [I have one of] the most interactive accounts, social media accounts, maybe in the world, certainly on Twitter, and actually before the takeover. So, actually, Twitter is an incredibly powerful tool to drive demand for Tesla. And I really encourage companies out there, from any branch of automotive or otherwise, to use twitter more and use their twitter accounts in interesting, informative and fun ways and it will help increase sales just like it will was the case with Tesla.

Other Income Details

Services and other revenue for Tesla, which includes out-of-warranty vehicle repair fees, among other things, reached $1.6 billion in the quarter.

Energy generation and storage revenue increased sequentially and year-on-year to reach $1.31 billion. However, cost of sales for the energy division was high at $1.15 billion in the fourth quarter.

Tesla said it has installed the capacity — across its factories — to produce 100,000 Model S and Model X vehicles and 1.8 million Model Y and Model 3 vehicles annually.

Read more about electric vehicles from CNBC Pro

Manufacturing capacity in Shanghai allows Tesla to make 750,000 Model 3 and Model Y electric cars annually, the company reported, while its first factory in Fremont, California, can make 100,000 of its higher-priced Model S and X and 550,000 of its Model 3 and Y- Vehicles. The factories in Austin, Texas and near Berlin, Germany each have the capacity to produce 250,000 Model Y vehicles annually, the company says.

Tesla also said about 400,000 customers in North America will now have the opportunity to test drive its experimental driver assistance system, FSD Beta. The company booked deferred income of $324 million related to FSD for the quarter, said in a shareholder presentation.

This driver assistance system is only available to customers who purchase or subscribe to Tesla’s premium driver assistance package, marketed as FSD or Full Self-Driving capability. Tesla does not make autonomous vehicles or driver assistance systems that are safe to use without a driver at the wheel and that are always ready to steer and brake. FSD Beta includes new software features that the company has not yet fully debugged.

The company also reiterated that its Cybertruck pickup is on track to start production in Texas this year, but won’t reach full-scale production until next year.

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