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sought to quell Wall Street’s concerns about demand for
Tesla Inc.
vehicles, suggesting recent price cuts have fueled a surge in orders.
“We currently are seeing orders at almost twice the rate of production,” Mr. Musk said Wednesday after the company reported record quarterly profit in its earnings report for the final three months of 2022.
Wall Street’s faith in the EV maker has been shaken in recent months as the company faced challenges including higher interest rates, stiffer competition and diminished brand popularity.
In 2022, Tesla came up short of its annual growth target, lost about $675 billion in market valuation and saw its share price fall 65%, its largest annual decline to date. Tesla responded in the first weeks of the new year by slashing vehicle prices, in some cases by nearly 20%, an unusual strategy by traditional auto-industry standards.
“We think demand will be good despite probably a contraction in the automotive market as a whole,” said Mr. Musk, who forecast a difficult recession this year. “These price changes really make a difference for the average consumer.”
Mr. Musk shared his upbeat view of demand as Tesla reported a fourth-quarter profit of nearly $3.7 billion, up 59% from a year earlier. The figure, which came even as vehicle-delivery growth slowed, was below the $3.8 billion Wall Street expected.
Tesla generated $24.3 billion in sales for the period, up 37% from the year prior, against analysts’ forecast of $24.7 billion, according to FactSet.
Tesla, in a statement, acknowledged the uncertainty of the economic environment. “In the near term we are accelerating our cost reduction roadmap and driving towards higher production rates,” the company said.
Tesla’s stock rose more than 3% in after-hours trading Wednesday.
Tesla’s price cuts will dent profitability, but margins should improve as the company reduces costs, Chief Financial Officer
Zach Kirkhorn
said.
Tesla on Wednesday issued a vague outlook for 2023, saying it planned on 1.8 million vehicles for the year without specifying whether that was a production or a delivery target. The company has been aiming to increase vehicle deliveries by an average of 50% annually. If the company were to deliver 1.8 million vehicles in 2023, that would mark roughly 37% growth from 2022 and come in well below Wall Street’s expectations.
The company has in the past been strapped for cash, but is navigating the current economic turmoil from a position of relative strength.
Tesla’s annual profit rose to $12.6 billion in 2022, from $5.5 billion in 2021. Annual revenue rose to $81.5 billion, from $53.8 billion the year prior.
Successive periods of profit have helped it build up a cash pile, prompting some investors to call for a sizable share repurchase. In October, Mr. Musk said Tesla might pursue a share buyback of $5 billion to $10 billion in 2023, though he cautioned more recently, “It wouldn’t be smart to do a buyback and then discover the recession is worse than 2009.”
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Tesla has a higher operating margin than many of its rivals, giving it more wiggle room to absorb price cuts.
The company said Tuesday that it plans to invest more than $3.6 billion on an expansion in the Reno, Nev., area. That includes money for two new factories where Tesla said it plans to manufacture battery cells and increase production of the semitrailer truck it brought to market in December. The company also has filed paperwork to expand its plant near Austin, Texas.
Tesla, meanwhile, plans to begin producing its long-awaited Cybertruck this summer, Mr. Musk said, cautioning that higher-volume manufacturing wouldn’t come until 2024.
Tesla also said it’s working on a new vehicle platform with additional details to be unveiled in March.
The company said the truck remained on track for production this year, adding that it is working on a new vehicle platform with additional details to be unveiled in March.
Tesla’s recent price adjustments have undercut some competitors’ EVs and inspired mixed feelings among consumers, prompting some to move ahead with a purchase while aggravating certain Tesla owners.
John White, a retiree in Scottsdale, Ariz., was inspired to take delivery of his white Model Y in December after Tesla, racing to lift year-end results, offered a $3,750 discount for doing so. That brought the vehicle cost down to $62,240, before upgrades, fees and taxes. That vehicle now costs $53,490 after Tesla cut prices this month.
“I just sort of feel like a pawn in their ‘let’s make the numbers’ game,” said Mr. White, who otherwise likes the crossover vehicle, his first Tesla.
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The company didn’t respond to a request for comment.
Tesla’s earnings release comes in the middle of a federal trial in San Francisco over Mr. Musk’s 2018 tweets proposing to take Tesla private. Investors say they lost billions of dollars because of Mr. Musk’s statements, some of which a judge has said were untrue. Mr. Musk testified Tuesday that he tweeted about a possible deal because he wanted to share his thinking with shareholders and convey that funding wouldn’t be an issue.
Mr. Musk, responding to a question Wednesday about Tesla’s brand image, said his more than 127 million followers on the social-media platform suggest he’s reasonably popular. He called on companies to advertise on the platform, which has faced an advertiser exodus since he bought it in October.
“The net value of Twitter, apart from a few people who are complaining, is gigantic,” he said.
Write to Rebecca Elliott at rebecca.elliott@wsj.com
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