Tesla is closing in on a profit for the third year in a row, but declining prices and demand signal serious trouble ahead.
According to the automaker’s report, in the fourth quarter of 2022, it managed to earn $3.7 billion in net income on $24.3 billion in revenue. Compared to the same period of the previous year ($2.8 billion), a 59% increase was recorded.
This is the third year that Tesla has finished in the black, earning $14.1 billion in net income in 2022 — compared to $5.5 billion in 2021 and just $721 million in 2020.
The company delivered 405,278 vehicles to customers in the past three months and 1.3 million vehicles for the year overall (just short of its goal of 50 percent year-on-year growth).
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The fourth quarter was indeed a period of real struggle for Tesla as it faced declining demand, an aging lineup and increased competition from other automakers. Musk’s purchase of Twitter led to a further sharp drop in Tesla shares, down 65% over the course of the year. According to Bloomberg, this greatly affected the net worth of Musk, who became the first person in history to lose $200 billion.
“After an unprecedented hyper-growth over the past few years in the electric car market, which was essentially created by Musk, Tesla is now facing fierce competition from all sides. Added to this is the behavior of Musk himself, who has effectively gone from a superhero in a red cape to a villain in the eyes of many investors after the ongoing Twitter fiasco cast a dark shadow over Tesla stock,” Wedbush analyst Dan Ives wrote.
Tesla is considered a leader in the electrification of the automotive industry, while having the world championship in sales of electric cars. Analysts believe the company’s recent price cuts are just the latest sign that the EV market may be entering a “shakedown” phase — when there are more EVs on the market, shorter wait times and lower prices. Tesla cut prices first in China and then in the US in what experts say was an attempt to boost demand before the end of the year.
But if Musk remains CEO of Twitter, it’s unclear whether any price cuts will help restore Tesla’s image.
“Tesla is Musk, and Musk is Tesla,” Ives writes.
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Source: The Verge
