Tesla stock gained in after-hours trading following an earnings report which showed the automaker beat expectations for revenues and profits. In addition the company reported it is on track to begin production of its Cybertruck later this year.
The company reported Q4 revenues of $24.32 billion, which was more than the estimate of $24.07 billion. Adjusted earnings per share came in at $1.19, vs a projected $1.12.
It was another record high for revenues for the EV maker, marking a $2 billion gain over the prior quarter, and almost $7 billion more than one year prior.
With regards to profitability, Tesla reported adjusted net income was $4.1 billion, which was $400 million more than the previous quarter, and $1.3 billion more than one year prior. The company noted it has “sufficient liquidity” to pay for its business plans, and its planned capacity upgrades.
Gross margin was 23.8% (25.4% Est.), as automotive gross margin came in at 25.9% (28.4% Est.). Although investors lately have been worried about price cuts and discounts the automaker has offered in China, the US, and some European markets, those cuts occurred after the reporting period, and their effects will not be seen until Q1 2023.
In the earnings call, CEO Elon Musk noted that since implementing the price cuts recently, demand has spiked considerably, noting, “Thus far in January we have seen the strongest orders year to date ever in our history.”
Tesla maintained it can support its margins, despite drops in its average selling prices (ASPs), through a time tested method of using “lower cost models, buildout of localized, more efficient factories, vehicle cost reduction and operating leverage.”
CFO Zack Kirkhorn noted on the call that despite recent price cuts, the company expected it will maintain 20% automotive gross margins, although that was lower than was reported in the most recent report.
The company still has a long-term delivery target of 50% (compounded annual growth rate), even though deliveries have fallen short of the mark recently. In its quarterly update, the company said, “For 2023, we expect to remain ahead of the long-term 50% CAGR with around 1.8M cars for the year.”
The company also noted that the Cybertruck is scheduled to begin production this year, and the next generation platform is still under development. More details on that were promised at the next investor day, March 1st.
Musk said of the Cybertruck, “Cybertruck will not be a significant contributor to the bottom line, but it will be next year.”
