Tesla’s $24.32 Billion Q4 Revenue Surpasses Estimates

Tesla has reported Q4 adjusted earnings per share of $1.19, higher than the $1.12 expected. Its Q4 revenue also came in at $24.32 billion, against the $24.07 billion expected.

In the fourth quarter, Tesla reported automotive revenues of $21.3 billion, up 33 percent from a year earlier. Nearly half of that came from regulatory credits in the fourth quarter of 2022, a substantial increase from the year before.

The automotive gross margin was 25.9 percent, the lowest in five quarters. Following vehicle price cuts earlier this month, its gross margins are expected to decline significantly in 2023.

At $3.28 billion, Tesla's operating cash flow was down 29 percent from last year and 36 percent from last quarter. Tesla earned $1.6 billion in services and other revenue in the quarter, including fees for out-of-warranty repairs.

Tesla's energy generation and storage revenues reached $1.31 billion, an increase sequentially and yearly. Its energy division, however, had a high cost of revenue, $1.15 billion.

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Tesla acknowledged in its shareholder deck that its average sales prices have been declining for many years, making affordability essential for growing into a company selling millions of cars yearly.

Tesla price cuts

A price cut by Tesla in late 2022 and this year upset customers in the U.S. and China who recently bought new Teslas at higher prices, leading to significant price drops for used Teslas in the U.S.

However, the price cut also boosted demand. On Wednesday, Musk told shareholders and analysts that Tesla was receiving almost twice as many orders as it produced.

"Thus far in January we've seen the strongest orders year-to-date than ever in our history. We're currently seeing orders of almost twice the rate of production," Musk said.

Musk estimates that 1.8 million Tesla vehicles will be produced by 2023, potentially making two million units this year. According to Tesla, its factories can manufacture 100,000 cars for Model S and X and 1.8 million Model Y and Model 3 annually.

"If it's a smooth year, without some big supply chain interruption or massive problem we have the potential to do 2 million cars this year. I think there would be demand for that too," Musk said.

Following the statement, Tesla's shares rose over 5 percent.

Musk-Twitter saga

With rising inflation, a strong greenback and high-interest rates, Tesla stock tanked 65 percent in 2022. Adding to the sell-off, Musk dumped over $40 billion in Tesla shares as part of his chaotic takeover of Twitter.

The move has damaged Tesla's brand. As Musk remains under public scrutiny, some Tesla investors have called for him to step down from Twitter or replace him with a new Tesla CEO.

During a conference call on Wednesday, Tesla shareholders asked Musk how he planned to protect the company's brand and reputation following his Twitter fiasco. Musk responded by praising Twitter as a great way to engage customers.

"I've got 127 million followers. And it continues to grow rapidly. That suggests that I'm reasonably popular. I might not be popular with some people. But for the vast majority of people, like the follower count speaks for itself," Musk said.

Furthermore, Musk explained that Twitter highly influences Tesla's sales. He advised all types of companies, automotive or otherwise, to use Twitter more effectively and in a way that is engaging, informative, and interesting so that it will boost sales, much like Tesla does.