Tesla Stock Boosts Profits: “Millions of Fully Self-Driving Cars Can Be Sold at 100% Gross Margin”

You’re here (TSLA) reported mixed fourth-quarter results on Wednesday, beating earnings estimates while missing revenue views. Tesla stock surged again in overnight trade as CEO Elon Musk was bullish about 2023.


After a terrible 2022, in which Tesla stock fell sharply in December, stocks fell again to start 2023. However, Tesla has rebounded from its steep price declines announced on January 1. 6 for vehicles in China, and has continued to rise since the announcement of price cuts in the United States and Europe a week later.

Tesla stock rose more than 5% after hours. The shares edged up 0.4% to 144.47 in Wednesday’s trading, reversing higher.

Tesla Earnings

Estimates: Analysts expect earnings to rise 33% to $1.13 per share in the fourth quarter. End of Dec. 2022, analysts expected EPS of $1.25. Analysts had set the revenue target at 39% growth, to $24.67 billion.

Earnings: Tesla’s EPS rose 40% to $1.19 while revenue rose 37% to $24.32 billion in the fourth quarter.

For the full year, revenue rose 51% to $81.46 billion, estimates missing. Earnings jumped 80% to $4.07 per share, beating Wall Street expectations.

Tesla had previously announced that its deliveries hit a record 405,278 in the fourth quarter. That missed the lowered forecast despite aggressive end-of-year incentives. Vehicle deliveries jumped 31% from a year earlier and almost 18% vs. 343,830 in Q3. Shipments also increased by 40% to 1,313,851 in 2022. This was well below the company’s 50% growth target.

Analysts had expected deliveries of around 420,000 Tesla in the fourth quarter, significantly reduced from higher estimates. Tesla’s deliveries in the third quarter had also been insufficient.

Tesla production rose to 439,701 in the fourth quarter, topping deliveries by more than 34,000. In the third quarter, production topped sales at just over 22,000. Tesla production rose to 439,701 in the fourth quarter, exceeding deliveries by more than 34,000. In the third quarter, production exceeded sales at just over 22,000.

With increased production at the Berlin and Austin, Texas factories, Tesla’s overall production capacity is now well over 450,000 per quarter.

Tesla unit sales were 1,313,851 for 2022, up 40% from 2022. 2021 but below the 50% target. The Model 3 sedan and Model Y crossover accounted for the vast majority of sales. High-end Model S and X vehicles make up the rest.

Meanwhile, the Cybertruck is expected to arrive in 2023, which would be Tesla’s first new model since the Model Y launched in early 2020. The oft-delayed truck will begin “early production” in the middle of the year, according to the CEO Elon Musk. Other reports indicate that the Cybertruck will begin mass production in late 2023.

Tesla has also started delivering its long-haul tractor-trailers to PepsiCo (PEP) in December. It’s unclear how many semi-trailers will be produced in 2023, with pricing and key specs still unclear. Tesla plans to build a $3.5 billion manufacturing plant in northern Nevada for tractor-trailers, according to the Nevada Independent.

On Wednesday, Tesla confirmed that production and delivery issues throughout 2022 “are largely concentrated in China.”

Tesla plans to increase production volume “as quickly as possible” to align with its compound annual growth rate (CAGR) target of 50%. That goal dates back to 2021. For 2023, Tesla said it plans to produce about 1.8 million vehicles, a 37% increase from 2022.

But CEO Elon Musk has said internally that Tesla is looking to make 2 million electric vehicles.

The electric vehicle giant also said the Cybertruck “remains on track to begin production later this year,” but Musk conceded that volume production may not happen until 2024.

The company added that its next-generation vehicle platform is under development and additional details would be shared at its Investor Day on March 1, 2023.

Tesla stock: profits come after price cuts

Tesla’s fourth-quarter earnings follow a rebound in Tesla’s electric vehicle registrations in China during the week of Jan. 29. 5-16, following recent sharp price declines. The most recent registration numbers appear to reflect some benefits from the Jan. 6 decision to cut prices in China.

Tesla has slashed prices for the Model 3 and Y in China, with the base Model 3 slashed more than 13% to $33,570. Local media in China suggested that Tesla had received 30,000 orders within three days of the announced cuts, according to CnEVPost.

Tesla also announced price cuts in the United States and Europe. This will make more models eligible for $7,500 tax incentives under the Inflation Reduction Act (IRA).

The electric vehicle giant has cut prices for the US Model 3 by 6 to 14 percent, depending on the version. A standard version of the Model 3 RWD has been reduced from $3,000 to $43,990. With the IRA tax credit applied to the vehicle, consumers who meet the income limits would pay $36,240.

The Performance Model 3 version was reduced by $9,000 to $53,990, falling below the $55,000 limit for tax credits. Meanwhile, Tesla’s base Model Y has been discounted by $13,000, or nearly 20%, to $52,990, also below the tax credit limit. The Performance variant of this vehicle has been reduced to $56,990, also down $13,000.

Musk told investors on Wednesday that so far in January, Tesla had “logged in the largest year-to-date orders than ever in our history.” The Tesla CEO said orders are currently coming in at “almost double the rate of production” and this is driving up Model Y prices.

“I think there’s only a fixed number of people who want to buy a Tesla car but can’t afford it. And so these price changes really make a difference to the average consumer,” said said Musk.

“It’s always been our goal at Tesla to make affordable cars for as many people as possible, so I’m glad we’re able to do that,” he added.

Self-driving state

Musk said on the earnings call on Wednesday that Tesla has rolled out the Full Self Driving (FSD) beta for city streets to about 400,000 customers in North America.

The electric vehicle giant is currently about 100 million miles away from FSD, not including freeway driving, according to Musk.

“We wouldn’t have released the FSD beta if the security stats weren’t great,” Musk said.

The Tesla CEO added that almost all Tesla vehicles can currently be equipped with self-driving software.

“That means there are millions of fully self-driving cars that can be sold at around 100% gross margin,” Musk said. “The value of the FSD increases as the autonomous capability increases, and then when it becomes fully autonomous, it’s an increase in fleet value that could be the biggest increase in asset value of any the story.”

Tesla Stock

Tesla stock is up 43% since Jan. 1. 6 lows of 101.81, reaching their 50 day and 10 week lines.

This is despite a number of analysts also weighing on Tesla stock, slashing price targets and earnings estimates.

TSLA shares rank third in the automaker industry group. Tesla stock has a composite rating of 46 out of 99. The stock has a relative strength rating of 5, an IBD Stock Checkup proprietary gauge for stock price performance. The EPS rating is 75.

Please follow Kit Norton on Twitter @KitNorton for more coverage.


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