Yesterday, at the Tesla Q4 Earnings call, investors and employees of Tesla were ecstatic as Tesla reported record-breaking sales for 2022. The multinational automotive and clean energy company is the world’s second-largest Electric Vehicle (EV) seller, right behind China’s BYD. 

Tesla has a long-standing relationship with China, as the country is its second-largest EV market after the US. Giga Shanghai also known as Gigafactory 3 was Tesla’s first overseas factory built for the final assembly of Model 3 and Model Y. 

China is the biggest EV market in the world with a projected revenue of $190.40 billion in 2023. The country reported a 113% growth in its EV sale, a staggering figure as compared to North America and Europe. China’s BYD overtook Tesla last year to be the number one Electric Vehicle seller in the world. Hence, it is obvious that Tesla will keep an eye on China and its growing EV market. 

During the Q4 earnings call, Musk personally accepted that Chinese EV makers are the biggest rivals for Tesla in the EV market. He further added that Chinese workers work the smartest and hardest of the lot, and hence their companies had the edge over others. 

Musk did not single out any particular Chinese company, but said that China is most likely going to be second to Tesla. He further said that the Tesla China team is winning as they are able to attract the best talent in the country. 

According to a Reuters report, Tesla China chief, Tom Zhu was recently transferred to the US to run the factories and business in North America. This move shows that Musk really appreciates the talent and work ethics of Chinese people. 

Tesla Announced Q4-2022 Financials

In 2022, Tesla recorded the highest revenue and sale in its history. The company sold 1.31 million EVs, marking a record-breaking 40% growth YoY, even though it fell short of the estimated 1.4 million target deliveries. According to the Q4 Earnings report, the company made $24.32 billion in revenue and a profit of $3.7 billion, which is a whopping 59% increase as compared to the profit for Q4 in the year 2021.

 

The company’s Earning Per Share (EPS) stood at $1.19 which was higher than the Refinitiv Estimate of $1.13. The company also exceeded the Q4 revenue estimate of $24.16 billion. Refinitiv Estimate is a standard used in the financial industry for advanced analytics and comparisons. Exceeding the predicted estimate has made the investors happy. 

Tesla’s net income for the year 2022 stood at $14.1 billion, showing a whopping growth as compared to the $5.5 billion in 2021. Musk thanked his employees for their hard work as 2022 was an incredibly challenging year due to declining demand, forced lockdowns, rising interest rates, delivery challenges, and more. 

Musk said that in January the company saw the strongest orders year-to-date than ever in the history of the company, and they are currently receiving orders at almost twice the rate of production. 

Tesla Price Cutback Was A Smart Move

Tesla Inc. which started with the EV Roadster (now out of production), sells four different Evs named Model S, Model X, Model 3, and Model Y, and the Tesla Semi Electric Truck. Over the past years, the average sale price for Tesla vehicles has gone down, which has made investors unhappy. Last year, the company slashed its prices by up to 20% to stimulate the overall demand for its EVs and also to bring the Model 3 and Model Y under the purview of the Inflation Reduction Act. After the price cut, the EVs may qualify for the $7500 Federal Tax Credit given to Electric Sedans.

Musk said that many people wanted to buy Tesla cars, but did not find them affordable. By cutting down the price, he wants to enable a lot more people to buy his EVs.

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