Tesla 4Q earnings fall short of analyst estimates as company warns of lower sales growth this year

DETROIT — Tesla’s net income more than doubled last quarter thanks to a one-time tax benefit but it warned of “notably lower” sales growth this year.

The Austin, Texas, vehicle, solar panel and battery maker said Wednesday that its net income was $7.93 billion from October through December, compared with $3.69 billion a year earlier.

But excluding one-time items such as the $5.9 billion noncash tax benefit for deferred tax assets, the company made $2.49 billion, or 71 cents per share. That was down 39% from a year ago and short of analyst estimates. Data provider FactSet said analysts expected earnings of 73 cents per share.

Chief Financial Officer Vaibhav Taneja said the change in asset valuation would raise the company’s taxes.

Tesla reported quarterly revenue of $25.17 billion, up 3% from a year earlier but also below analyst estimates of $25.64 billion.

Profits were off because Tesla lowered prices worldwide through the year in an effort to boost its sales and market share.

Earlier this month Tesla reported that fourth-quarter sales rose by almost 20%, boosted by steep price cuts in the U.S. and worldwide through the year. Some cuts amounted to $20,000 on higher priced models.

Shares of Tesla Inc. fell 6% in trading after the markets closed Wednesday.

Tesla’s sales growth rate was slower than previous quarters. For the full year, it sales rose 37.7%, short of the 50% growth rate that CEO Elon Musk predicted in most years. The company reported deliveries of 484,507 for the quarter. As usual, the bulk of Tesla’s sales were its lower-priced Models 3 and Y.

Fast growing Chinese powerhouse BYD passed Tesla in the fourth quarter as the world’s top-selling electric vehicle company.

In its letter to shareholders released after Wednesday’s closing bell, Tesla cautioned that sales growth this year may be “notably lower” than the 2023 growth rate, as it works to launch a next-generation vehicle at a factory near Austin, Texas.

The company, the letter said, is between two big growth waves, one from global expansion of the Models 3 and Y, and a second coming from the next-generation vehicle.

On a conference call with analysts, Musk said Tesla expects to begin producing the lower-cost next-generation vehicle toward the end of 2025 at the company’s factory near Austin. Revolutionary manufacturing techniques that require innovative equipment will require engineers to be “living on the (assembly) line,” Musk said.

After Austin, the company will build the new vehicles at a new plant to be built in Mexico, he said.

Musk was asked if shareholders should be concerned about his comments on X, formerly Twitter, that he is “uncomfortable” with growing Tesla into an artificial intelligence and robotics leader without owning 25% of the company’s shares.

Earlier this month Musk seemed to challenge the Tesla board to come up with a new compensation plan for him that would grant him more shares.

Unless he gets 25%, he wrote that he’d prefer to build products outside of Tesla, apparently with another company.

On the call, Musk explained that with a 25% stake, he can’t control the company, yet he would have strong influence. But with his current stake he could be voted out on recommendations of a shareholder advisory firm. Activists that influence those firms “have strange ideas about what should be done,” Musk said.

He said he was not looking for “additional economics” but wanted to be an effective steward of the technology.

Musk now owns about 13% of Tesla stock after selling of much of his stake to buy X in 2022.

Tesla said the stainless-steel clad Cybertruck pickup deliveries will ramp up through this year. Also this year, revenue growth from energy storage should outpace the automotive business, the company said.

“We expect the ramp of Cybertruck to be longer than other models given its manufacturing complexity,” the company said.

Tesla’s gross profit margin fell to 17.6% for the quarter, down 3.8 percentage points from a year ago as price cuts chewed into profits.

For the full year, Tesla reported net income of almost $15 billion including the one-time tax benefit. Excluding it, the company made $10.88 billion, down 23% from 2022. Gross profit margin was 25.6% in 2022, but that dropped to 18.2% last year.

Tesla said that during the fourth quarter, it released the latest version of its “Full Self-Driving” software to employees and then selected customers who will test it. The new version uses artificial intelligence to help control steering and pedals instead of “hard coding” all driving behaviors. But the system still can’t drive itself, and Tesla says owners must be ready to intervene at all times.