Tesla reports $24.3B revenue in the fourth quarter, beating Street estimates

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Tesla just beat Wall Street revenue estimates for the fourth quarter of 2022. The company closed out Q4 with $24.3 billion in revenue, a 37% increase from the same quarter last year and a 13% bump quarter-over-quarter. Analysts had expected the company to earn around $24.2 billion, according to Yahoo Finance data.

The electric vehicle maker had $1.4 billion in free cash flow at the end of Q4, which is down from the $3.3 billion the company had in the bank at the end of the third quarter.

Investors today will be watching out for gross margins after Tesla slashed prices and offered multiple discounts on its vehicles. While Tesla as a whole closed the quarter with a 16% operating margin, automotive gross margins came in at 25.9%, which is the lowest figure in the last five quarters.

Margins in the first quarter of 2023 might look worse, says Eric Schiffer, a Tesla investor and the CEO of private equity firm Patriarch Organization.

“The outlook will still depend on the recent moves of Q1, which suggest some compression in demand,” Schiffer told TechCrunch, referring to January’s price cuts.

The company acknowledged that average sales prices have “generally been on a downward trajectory for many years” and said the company would prioritize “affordability” so that it could grow into a company that sells multiple millions of cars annually. That will likely be a necessity for the automaker as it, along with everyone else, faces macroeconomic pressures, a looming recession and increasing competition from other automakers.

“Tesla is not immune from the recession, and I still expect to see more recession-driven market pain,” said Schiffer.

Earlier this month, Tesla reported vehicle deliveries of 405,278 in the fourth quarter. While those were record deliveries, the automaker still missed Wall Street estimates for the third quarter in a row. Similarly, Tesla’s 1.3 million vehicle deliveries in 2022 was also a record for the automaker, but that number misses Tesla’s own guidance of achieving 50% growth YoY and getting to 1.4 million deliveries.

Regardless, Tesla still intends to grow production as quickly as possible “in alignment with the 50% CAGR target we began guiding to in early 2021,” and reach 1.8 million cars in 2023.

On Tuesday, Tesla announced plans to invest an additional $3.6 billion into its Nevada gigafactory to build a battery cell facility and a Semi truck factory. During today’s earnings call, Tesla is expected to discuss future gigafactories like one planned for Indonesia and another, potentially, in Mexico.

Tesla said it remains focused on “autonomy, electrification and energy solutions.” The company’s energy storage arm finished out 2022 with the “highest level” of deployments ever. Energy storage deployments increased 152% from Q4 in 2021 to 2.5 GWh, for a total 2022 deployment of 6.5 GWh. Tesla said demand for its storage products “remains in excess of [its] ability to supply.” The company said it  is ramping up production at its 40 GWh Megapack factory in Lathrop, California to address demand.

Tesla’s solar deployments also increased 18% YoY in Q4 to 100 MW, with a total 348 MW of solar deployed in 2022.

Tesla’s stock saw a 3.2% spike to $149 per share immediately after earnings dropped, but has since come back down to $144 in after hours trading.

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