Tesla on the move

Tesla’s fourth-quarter results showed a company on the move with a big increase in vehicles produced and revenue beating Wall Street estimates.

Tesla and its CEO Elon Musk elicit strong views from analysts and investors. Some say it is the next Apple, while others argue it is an overvalued stock of a mediocre car company.

If its latest results are anything to go by, the company deserves to be trading at a premium because of its impressive performance.

Tesla recorded $24.32 billion in revenue for the quarter, higher than the consensus estimates of $24.16 billion.

It also generated higher net income than the consensus estimates – earnings per share of $1.19 compared with the estimated $1.13.

After the earnings release, Tesla’s share price increased by over 5% as investors reacted to the carmaker’s strong performance.

Tesla CEO Elon Musk told investors that 2022 had been the best year for Tesla in every aspect.

The company produced 1.37 million vehicles in the 2022 financial year, representing a 44% increase in its production from the 2021 financial year.

Tesla significantly increased its production capabilities in the past few years by building factories in China, Texas, and Berlin.  

Tesla also managed to sell 1.31 million vehicles in 2022, a 40% increase from 2021.

The production and revenue growth looks great, but many investors have expressed concern over demand for Tesla cars in light of recent car price drops.

The sales data showed that for Q4 2022, Tesla sold only 92% of the cars it produced – significantly down from its 4-year average of 99%.

Over the last three quarters, the gap between cars produced and sold has seen an upward trend.

Many investors fear that Tesla is reaching a slowdown in growth and lower vehicle demand.

Musk addressed this concern, saying for 2023 thus far, Tesla has received a record number of vehicle orders.

He added that their order numbers are almost twice as high as the company’s production capabilities.

Commenting on the recent price cuts, Musk said it has always been Tesla’s intention to make their cars as affordable as possible.

The strong demand also resulted in Tesla slightly increasing the price of its model Y vehicles.

Even with the expected contraction in the automotive market for 2023, Tesla is confident that it will continue to have strong vehicle sales.

Musk said the increased scale of their Texas and Berlin factories helped Tesla to operate at much lower costs, making it possible to cut prices.

The lower costs could be seen in the general decrease in Tesla’s operating expenditure relative to its revenue.


Top JSE indices