Tesla abruptly halted its growth in the fourth quarter of 2023 and warned that slowing sales will continue this year. The company led by Elon Musk published the closing accounts of the last financial year on Wednesday and included a warning that investors did not like at all: “In 2024, the growth rate of our vehicle volume could be significantly lower than the rate of growth achieved in 2023, as our teams work to launch the next generation vehicle at the Texas gigafactory.” The company did not specify a growth target. Tesla has already been overtaken by Chinese company BYD as the largest electric car maker.
The American company’s sales increased by only 3% in the fourth quarter of the year, to 25,167 million dollars (23,133 million euros, at current exchange rates), with an increase of only 1% in the turnover of the automotive sector. For the full year, revenue increased 19% to $96,773 million, partly driven by its battery and solar power business.
For its part, profits grew 19% in 2023, to $14,997 million, according to accounts presented by the company on Wednesday, using generally accepted accounting criteria. This was due to extraordinary tax benefits of $5.9 billion recorded in the fourth quarter. Using the company’s own criteria (which among other things exclude this non-recurring item), profitability suffered and profit fell by 23% for the year, to 10,882 million for the year. The results disappointed the market and Tesla’s price plummeted on the stock exchange outside of regular trading hours.
The slowdown in 2023 comes after a 2022 of strong growth in both revenue and profits, in which Tesla became the most profitable automaker in the United States. In 2023, although car deliveries set a record and continued at a good pace, they did so at lower prices. Accounts presented this Friday show that adjusted gross operating margin stood at 17.2% in 2023, compared to 23.2% in 2022. This margin erosion is due to lower prices. Expenses, however, grew by 22%, so the operating profit fell by 35%, to 8,891 million dollars.
In the analyst conference, Elon Musk confirmed that Tesla is preparing to launch a new model towards the end of 2025. In his earnings report he underlines: “We are focused on bringing the next generation platform to market as quickly as possible. we can, with plans to start production in the Texas gigafactory. This platform will revolutionize the way vehicles are produced,” he says. In the analyst conference, Musk pressed the idea: “Once operational, it will be far superior to any other existing manufacturing technology in the world. “It’s the next level,” he said.
Tesla shares started 2024 lower on simultaneous concerns about lower demand for electric cars and growing competition in the industry. Tesla ends 2023 as the market leader, but it is losing share and its margins are eroding due to the price cuts it has had to undertake. After the presentation of the results, this Wednesday decreased by 5%.
Automakers, suppliers and even rental car companies have warned that interest in electric vehicles is waning. General Motors and Ford are scaling back their expansion plans in the segment, while Hertz is selling part of its electric fleet to replace those vehicles with gasoline-powered cars.
Tesla announced on January 2 that it delivered 484,507 cars in the fourth quarter of 2023. This figure represents a record for the company and a growth of 19.5% compared to the previous year. In all of 2023, Tesla’s sales were 1.81 million units, a 38% unit increase over 2022. The company hit its official target of 1.8 million units, though Musk went so far as to point out at an analyst conference a year ago, in a moment of euphoria, that the price cuts the company was undertaking could allow it to reach two million cars in 2023.
Although Tesla maintains leadership in the pure electric car market for the full year, in the fourth quarter the Chinese company BYD dethroned Elon Musk’s company with the sale of 526,409 electric cars. Already in the third quarter the Asian company was on the verge of overtaking the American one.
Tesla has told its suppliers it plans to start production of a new mass-market electric vehicle, code-named “Redwood,” in mid-2025, Reuters reported Tuesday, citing sources familiar with the matter, who described the model like a compact crossover. Musk has long sought to launch affordable electric models, including a base car for around $25,000, which would allow him to compete with cheaper gasoline cars and a growing number of affordable electric vehicles, such as those made by BYD . Musk initially promised to build a $25,000 car in 2020, a plan he shelved and then revived. Tesla’s cheapest car, the Model 3 sedan, currently has a starting price of $38,990 in the United States.
Musk’s participation
Elon Musk surprised last January by asking for a larger stake in the company. Musk has received more stock awards than any other American executive. However, he sold a good part of his stake in the company for other operations, such as the purchase of Twitter, and now claims that with a stake of less than 25% it is not worth developing some of his projects within Tesla, such as those related to artificial intelligence, robotics and autonomous driving. Musk is the company’s largest shareholder with 13%, despite all the shares sold.
This Wednesday, in the conference with analysts, he tried to justify himself: “I’m not looking for additional profits. I just want to be an effective steward of a very powerful technology,” she said. “That’s what I’m aiming for, strong influence, but not control. If there was a way to achieve this, that would be great,” he said. “I see the path to creating an artificial intelligence and robotics giant with truly immense capability and power,” he said, warning that he did not want to run the risk of being removed from recommended ratings by, for example, an equity consultancy firm.
Much of Tesla’s valuation is tied to the development of these technologies, and none of the options that Elon Musk seems to have left on the table appeal to the market: taking those assets, which would decrease Tesla’s value, or receiving a large block of shares, which would dilute the participation of the rest of the shareholders.
Musk wrote on January 15 on his social network. Enough to be influential, but not so much that it can’t overthrow me. Unless that’s the case, I would prefer to create products outside of Tesla.”
Musk also explained in another message that the reason there is no new equity compensation plan for now is that he is still waiting for a court decision on his previous multimillion-dollar plan from the Delaware court that heard a lawsuit shareholder. The trial took place in 2022, but the sentence has not yet been issued. The plan was valued at about $55 billion.
Follow all the information on Economy and Business on Facebook and Xor in our weekly newsletter
The five-day agenda
The most important economic quotes of the day, with the keys and context to understand their scope.
RECEIVE IT IN YOUR EMAIL
2024-01-24 21:18:59
#Tesla #warns #growth #significantly #year #Economy