Tesla Notes Interest Rate Concerns as Revenue Soars

Cockpit of Tesla Model S car
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Key Takeaways

  • Tesla (TSLA) released earnings results for the fourth quarter of 2022 after the closing bell on Jan. 25, 2023.
  • The electric vehicle manufacturer reported its highest ever quarterly revenue and beat profit estimates.
  • The company highlighted uncertainties about the macroeconomic environment, particularly the impact of higher interest rates.

Tesla (TSLA) posted record quarterly revenue, net income, and operating income, while raising concerns about the effect of higher interest rates on its business.

Tesla reported fourth quarter earnings of $1.19 per share, with revenue soaring 37% to $24.32 billion. Both beat analysts' forecasts. Net income jumped 59% to $3.69 billion, and operating income was up 49% to $3.90 billion.

The carmaker noted it improved its operating margin by 129 basis points (bps) from a year ago. Tesla credited that to the introduction of lower-cost models, the buildout of localized, more efficient factories, operating leverage, and vehicle price cuts. It pointed out that its average sale price has been "on a downward trajectory" for many years, and that "improving affordability is necessary to become a multi-million vehicle producer."

Uncertain Environment

The company noted "there are questions about the near-term impact of an uncertain macroeconomic environment," particularly rising interest rates. It added that the carmaker is "accelerating our cost reduction roadmap and driving toward higher production rates."

Tesla added that it anticipates producing about 1.8 million vehicles in 2023, ahead of its target of a 50% compound annual growth rate (CAGR).

On the same day as Tesla released its results, The Wall Street Journal reported that Ford (F) was in negotiations to sell a manufacturing plant in Saarlouis, Germany, to Chinese electric carmaker BYD. The potential deal could signal a shift in the competitive landscape in the European electric vehicle market, where Tesla has also made inroads via its factory in Berlin.

Shares of Tesla are up about 0.6% in extended trading.

Chart showing the share price performance of Tesla (TSLA) on Jan. 25, 2023

YCharts

Article Sources
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  1. Tesla. "Q4 and FY 2022 Update."

  2. The Wall Street Journal. "Ford in Talks to Sell German Plant to China’s BYD."

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