Tesla Beats Q4 2022 Earnings Estimates: Key Takeaways

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Tesla (NYSE: TSLA) is trading higher in US premarket price action today after it reported better-than-expected earnings for the fourth quarter of 2022. Here are the key takeaways from the company’s earnings.

Tesla reported revenues of $24.32 billion in Q4 2022 which was 37% higher than the corresponding quarter last year and ahead of the $24.16 billion that analysts were expecting. The company’s automotive revenues rose 33% to $21.3 billion over the period. It earned $467 million from sales of regulatory credits in the quarter which was almost 50% higher YoY.

Tesla produced 439,701 cars in the fourth quarter of 2022 which was a new record. Its deliveries hit 405,278 in the quarter which again was a record. The company’s deliveries rose 31.3% YoY in the quarter.

Tesla posted better-than-expected earnings in Q4 2022

In the full year, Tesla’s revenues rose 51% to $81.5 billion. TSLA delivered 1.31 million cars last year as compared to 936,172 cars in 2021. However, the 40% YoY delivery growth fell well short of the 50% growth that the company initially targeted.

In 2022, Tesla delivered over 1 million cars for the first time. The milestone looks astonishing as the company delivered its millionth car in 2020 only.

Tesla reported a contraction in margins

Tesla reported an operating profit margin of 16% in the fourth quarter while the commensurate figure for the full year was 16.8%. The company posted a GAAP net income of $3.7 billion in Q4 which took its full-year net income to $12.6 billion. The company’s adjusted EPS of $1.19 was ahead of the $1.13 that analysts were expecting.

Markets gave a thumbs up to Tesla’s earnings report and the stock is trading higher today in premarkets. While TSLA stock fell to a multi-month low on the first trading day of 2023, it has since rebounded. The stock fell 65% in 2022 and also lost its position as a $1 trillion dollar company.

TSLA’s profits doubled last year

Tesla has now posted profits for three consecutive years and the profits have been gradually rising. The metric more than doubled last year led by higher deliveries.

The company said that its average vehicle selling prices have been coming down. It emphasized that increasing the affordability of Tesla cars is crucial if the company has to become a multi-million vehicle producer.

The company is investing in new plants and had $22.2 billion as cash and cash equivalents on its balance sheet at the end of 2022. The cash pile would help the company increase its production capacity.

TSLA also provided an update on its installed production capacity. It said that the Shanghai Gigafactory has the capacity to produce more than 750,000 Model 3/Y cars annually. The Freemont plant has an annual capacity to produce 550,000 Model 3/Y and another 100,000 Model S/X. Its Texas and Berlin Gigafactories, which are ramping up production fast can produce over 250,000 Model Y cars every year.

Tesla expects to produce 1.8 million cars in 2023

Tesla said that it expects to produce 1.8 million cars in 2023 which is a YoY growth of just around 31%. During the earnings call, Tesla’s CEO Elon Musk said that while its internal production goal is 2 million cars, it is providing conservative guidance.

He said,” I don’t know, there just always seems to be some freaking force majeure thing that happens somewhere on earth. And we don’t control if there’s like earthquakes, tsunamis, wars, pandemics, et cetera.”

There have been concerns over the demand for Tesla cars. Musk began the earnings call by addressing the demand question and he said he wants to “put that concern to rest.”

He added, “Thus far in January, we’ve seen the strongest orders year-to-date than ever in our history. We currently are seeing orders at almost twice the rate of production. So, I mean that — it’s hard to say whether that will continue twice the rate of production, but the orders are high. And we’ve actually raised the Model Y price a little bit in response to that.”

Musk on the popularity of TSLA cars

Another investor concern has been the damage to Tesla’s brand ever since Musk acquired Twitter. Multiple surveys have shown that Musk’s Twitter ownership negatively impacted TSLA stock. Even Cathie Wood of ARK Invest, a long-time TSLA stock bull, admitted that some people might now not buy the company’s cars.

Musk answered the popularity question by pointing to his 127 million Twitter followers. He said, “That suggests that I’m reasonably popular. It might not be popular with some people, but for the vast majority of people, my follower count speaks for itself. I have the most interactive account — social media account, I think, maybe in the world, certainly on Twitter, and that actually predated the Twitter acquisition.”

Musk Reaffirms that Tesla could become the largest company

Musk flaunted manufacturing prowess as its real competitive strength. He added that the company is developing other products also. He however said, “We’re not going to announce them, obviously, but they’re very exciting. And I think it will blow people’s minds when they — when we reveal them.”

He also made an observation on TSLA’s stock price and said, “the value of stocks can drop sometimes to surprisingly low levels.” Musk added, “But long term, I am convinced that Tesla will be the most valuable company on earth.”

During the Q3 2022 earnings call, Musk predicted that Tesla’s market cap would one day surpass the combined market caps of Apple and Saudi Aramco.

Musk praised Chinese EV companies

During the Q4 2022 earnings call, Musk praised Chinese EV companies and said that he has a “lot of respect” for them. He added, “They work the hardest and they work the smartest. That’s — so a lot of respect for the China car companies that we’re competing against. And so, if I would have guessed, there are probably some company out of China as the most likely to be second to Tesla.”

In line with his previous stance, Musk criticized the Fed for its rate hikes and said that the economy is heading for deflation. He added the Fed is “at risk of crushing the value of all equities.”

Tesla stock is meanwhile trading almost 7% higher in US premarkets today and continues to recoup its losses after a tumultuous 2022.


Mohit Oberoi is a freelance finance writer based in India. He has completed his MBA in finance as a major. He has over 15 years of experience in financial markets. He has been writing extensively on global markets for the last eight years and has written over 7,500 articles. He covers metals, electric vehicles, asset managers, tech stocks, and other macroeconomic news. He also loves writing on personal finance and topics related to valuation.