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Tesla Q4 2023 Earnings

Posted:

Shares Plunged on Underwhelming Earnings and Warning on Weaker Production Growth Rate

Tesla for Q4 and FY23 experienced its first annual profit decline in profits since 2017, as revealed in its earnings report on January 24th. This announcement led to a decline in the company's stock value, highlighting the challenges faced by Elon Musk's electric vehicle goliath as it deals with narrowing profit margins amid its efforts to increase production. (Source: Tesla)

Tesla for the fourth quarter reported revenue of $25.167 billion increase of 3% from $24.3 billion same period last year. The modest increase in automotive revenue was, in part, a result of a lowered average selling price following significant price reductions globally in the latter half of the year. For the entire fiscal year, Tesla reported revenue of $96.77 billion, indicating a 19% increase over the previous year. (Source: Tesla)

Moreover, Tesla's operating margin for the quarter stood at 8.2%, marking a decrease of 784 bps from the previous year's quarter, where it stood at 16%. It was slightly higher than the 7.6% reported in the preceding quarter. (Source: Tesla)

Gross margins declined to 17.6% in the fourth quarter, compared to 23.8% in the corresponding period from the previous year. This decrease in margins can be attributed to price reductions, higher operating expenses, and the expenses associated with ramping up production of the Cybertruck. (Source: Tesla)

Furthermore, for the fourth quarter, the automotive giant reported Earnings Per Share (EPS) of $ 0.17 share down by 40% YoY. Additionally, for FY 2023, Tesla disclosed an EPS of $3.12, reflecting a 23% decrease from the previous year's record of $4.07. (Source: Tesla)

The company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for 2023 amounted to $16.6 billion, marking a 13% reduction compared to the $19.2 billion reported in 2022. (Source: Tesla)

Apart from this, for the fourth quarter, Tesla's net income diluted (GAAP) more than doubled, reaching $7.9 billion, or $2.27 per share, compared to $3.7 billion, or $1.07 per share, in the same period the previous year. This substantial increase was primarily attributed to a one-time noncash tax benefit of $5.9 billion. However, diluted (non-GAAP) net income plunged by 40% YoY.  (Source: Tesla)

By the end of 2023, Tesla had a total of 54,892 Supercharger connectors accessible to drivers globally, distributed across 5,952 stations. (Source: Tesla)

Cybertruck Updates

In the fourth quarter, Tesla initiated the sale of Cybertrucks to customers for the first time. According to the company's investor deck, Tesla anticipates a more prolonged ramp-up period for the Cybertruck compared to other models due to its manufacturing complexity. The company also stated that it currently possesses the capacity to manufacture over 125,000 Cybertrucks annually. During the earnings call, Elon Musk praised the Cybertruck, referring to it as their best product ever and a "head-turner." (Source: Tesla)

Outlook

Concerning its full-year production, Tesla mentioned that the growth rate in vehicle volume for 2024 might be considerably lower than the rate achieved in 2023. This projection is attributed to the focus on launching the next-generation vehicle at Gigafactory Texas also that the company is between two significant growth waves. The mentioned strategy involves a phased approach, with the first wave focusing on the expansion of the Model 3 and Model Y. Subsequently, the next phase will entail the global expansion of a next-generation vehicle. As a result, Tesla indicated that it might not meet Street estimates for 2024, which were set at 2.19 million and would have represented a 21% increase from the production figures in 2023. (Source: Tesla)

In the earnings call, when questioned about the production timeline for Tesla's humanoid robot, Optimus, company executives chose not to provide specific guidance. Elon Musk expressed his belief that Optimus has the potential to surpass the combined value of everything else for Tesla. He emphasized that Tesla's technology from its automotive unit can be effectively applied to the humanoid robot, describing a car as "just a robot on four wheels."

Musk asserted that Optimus is currently the most advanced humanoid robot under development globally, with competitors such as Boston Dynamics, Agility Robotics, and Figure in the market. Various other robotics companies, including Sanctuary, Apptronik, 1X, Fourier, and Unitree, are also working on dexterous manipulation hardware to mimic human hands.

While Musk mentioned that Tesla has a "good chance" of delivering some Optimus units next year, he did not provide details on their capabilities or cost. Musk acknowledged his tendency to be optimistic about timelines during the call.

Additionally, In its earnings release and subsequent earnings call, the company acknowledged progress on its next-gen platform. The company stated they are focused on bringing the next-generation platform as soon as possible along with the plan to start production at the Giga factory in Texas. The company also mentioned that this platform will revolutionize how vehicles are manufactured. (Source: Reuters)

Tesla's CEO Elon Musk elaborated on the progress, mentioning, that they are very far along on the next-gen low-cost vehicle. He further elaborated that this is a revolutionary manufacturing system, far more advanced than any other in the world. He clarified that the company's current schedule aims for this vehicle to begin production in the second half of 2025. This aligns with previous reports from Reuters, which indicated that Tesla informed suppliers of its intention to commence production of a new mass-market electric vehicle, codenamed "Redwood," in mid-2025. (Source: Reuters)

On January 24, 2024, Tesla's stock fell by 6% in late trading poised to extend the 2024 slump (Source: Bloomberg)

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