Tesla stopped its growth sharply in the fourth quarter of 2023 and warned that the decline in sales would continue this year. The company led by Elon Musk published this Wednesday its final report for the last fiscal year and added a warning that investors did not like at all: “In 2024, the growth rate of our vehicle volume could be significantly lower than the growth rate achieved in 2023. as our teams at the Gigafactory in Texas work to launch the next generation vehicle.” Tesla has already been overtaken by China’s BYD as the largest electric car maker.
The American company's sales in the fourth quarter of the year increased by only 3% to 25,167 million US dollars (23,133 million euros at the current exchange rate), with sales in the automotive sector increasing by only 1%. For the full year, revenue increased 19% to $96,773 million, driven in part by batteries and the solar business.
Profit, in turn, rose 19% to $14,997 million in 2023, according to financial statements filed by the company on Wednesday, which are based on generally accepted accounting criteria. This is due to extraordinary tax benefits of $5.9 billion recorded in the fourth quarter. According to the company's own criteria (which, among other things, exclude this one-off item), profitability suffered a collapse and profits fell by 23% over the year to 10,882 million. The results disappointed the market and Tesla's price fell outside of normal stock market trading hours.
The slowdown in 2023 comes after a 2022 of strong sales and profit growth in which Tesla became the most profitable automaker in the United States. In 2023, car deliveries set a record and continued to perform well, but at lower prices. The accounts presented this Friday show that the adjusted gross operating profit margin was 17.2% in 2023, compared to 23.2% in 2022. This fall in margin was due to price reductions. Expenses, on the other hand, increased by 22%, so that operating income fell by 35% to $8,891 million.
The company has confirmed that it is preparing to launch a new model in 2025. Its earnings report states: “We are focused on bringing the next-generation platform to market as quickly as possible and plan to begin production at the Gigafactory in Texas. “This platform will revolutionize the way vehicles are manufactured,” he says.
Shares of the Elon Musk-led company have started 2024 lower amid concerns about lower demand for electric cars and increasing competition in the industry. Tesla is ending 2023 as the market leader, but has lost market share and its margins are shrinking due to the price cuts the company has had to make. After the presentation of the results, it fell by 5% this Wednesday.
Car manufacturers, suppliers and even car rental companies are warning that interest in electric vehicles is waning. General Motors and Ford are scaling back their expansion plans in this segment, while Hertz is selling part of its electric fleet to replace these vehicles with gasoline 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. For the full year 2023, Tesla's sales amounted to 1.81 million units, an increase of 38% compared to 2022.
The company has achieved its official goal of achieving sales of 1.8 million units in 2023. However, Elon Musk, in a moment of euphoria, noted at the analyst conference a year ago that the company could achieve the price cuts he had made. Two million cars were sold last year.
Although Tesla continued to maintain its lead in the pure electric market for the full year, China's BYD dethroned Elon Musk's company in the fourth quarter with sales of 526,409 electric cars. Already in the third quarter, the Asian company was on the verge of overtaking the American company.
Tesla has told suppliers it plans to begin production of a new mass-market electric vehicle codenamed “Redwood” in mid-2025, Portal reported on Tuesday, citing sources familiar with the matter, who described the model as a compact crossover.
Musk has long sought to bring affordable electric models to market, including a base car costing around $25,000, that would allow him to compete with cheaper gasoline cars and a growing number of affordable electric vehicles like those from BYD. Musk initially promised to build a $25,000 car in 2020, a plan he later put on hold and then restarted. Tesla's cheapest car, the Model 3 sedan, currently has a starting price of $38,990 in the US.
Musk's involvement
Elon Musk surprised everyone this January by demanding a larger stake in the company. Musk has received more stock awards than any other American executive. However, he has sold much of his shares in the company for other businesses, 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, for example related to artificial intelligence, robotics and autonomous driving.
Much of Tesla's valuation is tied to the development of these technologies, and none of the options Elon Musk appears to have left on the table appeal to the market: take or get the companies that would reduce Tesla's value a large block of shares. which would dilute the participation of the remaining shareholders.
Musk wrote on his social network on January 15 Enough to be influential, but not so much that they can't bring me down. Unless that is the case, I would prefer to develop products outside of Tesla.”
Musk also explained in another statement that the reason there is no new stock compensation plan for now is because he is still awaiting a court ruling on his previous multimillion-dollar plan from the Delaware court hearing the lawsuit shareholder checked. The trial took place in 2022, but the verdict has not yet been made. This plan was worth about $55 billion.
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