Tesla delivers underwhelming earnings despite Cybertruck launch and high vehicle deliveries
Despite putting a new vehicle on the market, announcing another for 2025 and beating Wall Street’s expectations for vehicle deliveries, Tesla was not able to shake off its disappointing third quarter.
The electric vehicle manufacturer brought in $25.1bn in revenue and posted $.71 in earnings a share in the fourth quarter of 2023, missing analyst expectations of 25.76bn in revenue and $0.74 earnings a share. The company’s fourth quarter revenue increased 3% year over year from $24.3bn in 2022.
“Tesla delivered another underwhelming quarter, with a notable miss on automotive gross margins standing out the most,” said Jesse Cohen, a senior analyst at Investing.com.
The company had a less-than-stellar third quarter, earning $690m less than what analysts expected after a drop in vehicle deliveries. However, investors were heartened in early January when the company announced its fourth quarter delivery numbers of 484,000 vehicles, surpassing its expectations of 480,000 cars delivered. Tesla’s overall vehicle deliveries for 2023 grew 38% year-over-year despite a broader drop in demand for electric vehicles across the industry.
“This was an important quarter for Tesla to show strong deliveries with clear momentum into 2024 as demand has upticked since 3Q based on all our global checks,” according to Dan Ives, managing director of investment firm Wedbush Securities. “This was a clear win for Musk and Tesla as hitting 1.8m vehicles for 2023 was a major achievement in a choppy macro for EVs.”
The results from the final quarter of 2023 bookends the EV manufacturer’s shaky start to the new year. In the second largest drop in market valuation since the company went public in 2010, Tesla lost more than $94m in the first two weeks of January. Part of the dip has been attributed to price cuts on vehicles manufactured in China, rising labor costs and ongoing concerns over negative news relating to the company, according to Bloomberg. Just last week, Tesla owners around the US complained of being unable to charge their vehicles or having their batteries lose all power completely after temperatures hit frigid lows. Though it’s known that EV batteries lose their range in cold temperatures, some people in Chicago, where temperatures hit a low of -9F (-23C), said their cars would not charge at all.
Tesla spent the last year cutting vehicle prices in order to undercut its EV competitors and increase demand for its vehicles. But that move has cut into its profit margins at a time when the company has raised worker pay across all of its US manufacturing plants. Tesla announced pay raises after the United Auto Workers Union made clear its intentions to organize at least one Tesla auto plant.
after newsletter promotion
Investors may be looking to hear more from CEO Elon Musk about Tesla’s Cybertruck sales on today’s call, as this is the first earnings since the EV manufacturer’s take on a pickup truck first hit the roads. The company has also been notifying suppliers of its intention to produce another mass-market vehicle, called Redwood, starting in mid 2025. The entry level vehicle would start at $25,000, a lower price point that would better position Tesla to compete with other EV players including China’s BYD, which recently surpassed Tesla as the world’s biggest EV manufacturer.