Another record quarter and another record year. That’s how Tesla begins its message to shareholders with its fourth-quarter and full-year 2022 results. The company grew its fourth-quarter earnings by almost 60% to $3,700 million and for the year as a whole, it more than doubled its earnings , to 12,556 million, which will make it America’s highest-earning automaker, ahead of General Motors (GM) and Ford. GM, the rival to beat, announced at the end of the third quarter that it expects 2022 to end with a profit of between $9.6 billion and $11.2 billion.
Tesla made its first annual profits in 2020 with just $721 million and multiplied them to $5,519 million in 2021. In 2022, revenue increased by 51% to 81,462 million. Though gross margin on car sales has deteriorated somewhat, the company has been able to keep operating expenses in check, which has boosted profits. The company has also reined in capital spending, which is boosting its free cash flow by 51% and growing its net cash position to a record more than $22,000 million.
Despite these results, the company is cautious about the future: “As we head into 2023, we know that there are doubts about the short-term impact of an uncertain macroeconomic environment and, in particular, the rise in interest rates. The Tesla team is used to challenges given the culture required to get the company to where it is today. In the near term, we are accelerating our cost reduction roadmap and moving toward higher production rates while we remain focused on executing the next phase of our roadmap.
Tesla is trying to allay fears about the price cuts it will have to make to start production, which will continue to squeeze margins for the foreseeable future. In general, the average selling price of his cars has been falling for many years. “It is necessary to improve affordability to become a multi-million vehicle manufacturer,” he stresses. And he explains that while average revenue per vehicle halved between 2017 and 2022, operating margin has steadily improved thanks to the introduction of lower-cost models, building larger, more efficient factories, reduced vehicle costs, and operational leverage. Overall, gross margin deteriorated, particularly in the fourth quarter, when it was 25.9%, compared to 30.6% a year ago.
1.8 million vehicles
Sales have also started to slow down from their exponential growth. In the fourth quarter, billings rose 37% year over year, a much slower rate than in previous quarters. “We plan to ramp up production as quickly as possible, in line with the 50% compound annual growth target we set in early 2021. Some years we will grow faster and others slower, depending on a number of factors. factors. By 2023, we expect to exceed the long-term goal of steady annual growth of 50%, with around 1.8 million cars for that year. Tesla’s long-term goal is to reach 20 million vehicles by 2030, which would make it the clear world leader in sales.
The company produced 1.37 million cars in 2022, and the 1.8 million it has targeted for 2023 implies growth of just over 30%. If the company says it’s still ahead of target, it’s because it looks back on previous years of very rapid growth. In addition, Tesla previously had a waiting list to sell its cars and its limit was what it could produce. Since last year, however, unsold stocks have been piling up. It disappointed with the pace of shipments in the fourth quarter, although it has recovered from the punishment it suffered in stock markets.
In any case, the company led by Elon Musk lost almost two-thirds of its value in 2022. Analysts and investors warn that fierce competition in electric cars will erode market share. Tesla was once worth more than $1 trillion, as much as any other automaker, despite making just over 1% of the world’s cars.
Musk used the conference with analysts to promote Twitter as a great tool to grow sales for Tesla and those of any company looking to advertise on the social network, which he bought for about $44,000 million at the end of October last year and which has been running somewhat chaotically ever since.
The tycoon was asked if his activities unleashed on Twitter, where he takes right-wing positions and calls for voting for the Republican Party, could deter potential Tesla customers. “Let me check my account. Ok, I have 127 million followers. That suggests I’m somewhat popular, I might not be popular with some, but for the majority, that number of followers speaks for itself,” he replied.
The 50-year-old businessman took the social network to a vote on whether he should stop being CEO of Twitter. Users told him to go, and he said he would if he found “someone dumb enough” to replace him. It’s been a little over a month and as you can see he still can’t find it.
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