Tesla’s earnings for the fourth quarter and full year 2022 are upon us, and with them Wall Street expectations for the electric vehicle maker to hit $24.03 billion in revenue for the quarter and adjusted earnings per share of about $1.13, according to data from Yahoo Finance. If Tesla hits that revenue estimate, it will mark a record high for the company, but also the slowest pace of growth since mid-2020.
As usual, Tesla will share earnings on Wednesday after market close, and management will discuss earnings and take questions from analysts during a webcast at 5:30 p.m. ET.
The automaker ends a tumultuous year in which its share price fell 65% due to factors ranging from CEO Elon Musk’s distraction with Twitter to fears of slowing sales in pandemic-hit China . Tesla is expected to address those concerns, along with its recent vehicle price cuts and missed fourth-quarter delivery estimates, on tomorrow’s call.
In fact, so much has happened in the last few months in Tesla country that Dan Ives, managing director of Wedbush Securities, said the upcoming earnings call and policy commentary will be “one of most important moments in Tesla’s history and for Musk himself.
Before diving into our expectations for the call, note that Tesla stock closed Tuesday at $143.89, rallying more than 30% since the start of the month after losing two-thirds of its value from April. 2022.
An appearance by Musk
Musk doesn’t always join Tesla’s earnings calls – and is in fact currently busy defending himself in court for defrauding investors with his infamous ‘funding secured’ tweet from 2018 – but the CEO is expected to make an appearance tomorrow, if only to allay investor fears that Tesla isn’t paying enough attention since it took over Twitter.
The executive also went on trial in November to defend his $56 billion Tesla salary after a shareholder sued to void the deal, which he said was unfairly awarded to Musk, a ” part-time CEO”.
Missed Delivery Estimates
During Tesla’s third quarter earnings call, Musk promised Tesla would deliver an “epic year-end.” The automaker set record vehicle sales and deliveries but still missed its own and Wall Street estimates. Partly fueled by last-minute discounts on Model Y and 3 vehicles in December, Tesla delivered 405,278 vehicles in the fourth quarter. The street expected 420,000 to 425,000 units to be delivered.
Analysts will likely question the company on its failures, as the fourth quarter marked the third consecutive quarter the automaker failed to make as many deliveries as it had promised. Tesla may be called upon to provide more realistic estimates for 2023.
We may also see updated delivery and sales figures for the fourth quarter when the results are released.
Margins on vehicle price cuts
Earlier this month, Tesla dropped the price of its long-range Model Y crossover (20% to $52,990) and Model 3 sedan (14% to $53,990) for US buyers. The vehicles’ new lower base price qualifies them for the $7,500 federal tax credit under the Inflation Reduction Act (IRA), which was enacted in August. Under the IRA, the threshold for electric sedans is $55,000 and for SUVs, pickups and vans it is $80,000.
Tesla has also lowered the prices of its Model S and Model X sedans, which are still too expensive to qualify for the EV tax credit.
The most recent price cuts mark at least the fourth time the automaker has discounted vehicles or offered credits in recent months. Tesla announced price cuts in China of up to 9% on Models 3 and Y in October, further slashing prices by nearly 14% at the start of the month. The company also issued an initial rebate of $3,750 for the Y and 3 models in the United States and Canada in early December, before increasing it to $7,500 later that month.
Investors did not like the price cuts, which they feared signaled a drop in demand for iconic electric vehicles. However, the price cuts appear to have actually boosted demand for the vehicles. What investors are hoping to gauge is whether the price cuts have squeezed Tesla’s margins too much. It may be too early to have those answers, but Tesla will likely provide guidance.
Updates on new gigafactories
Tesla on Tuesday announced plans to invest an additional $3.6 billion in its Nevada gigafactory, adding two new facilities dedicated to building battery cells and Tesla Semis. The automaker could discuss those plans in more detail, such as when it hopes to innovate facilities and start production.
The automaker said it has a multi-year plan to increase production by 50%, so analysts will want to hear about other new gigafactories. Tesla has been reported to be planning a $10 billion gigafactory in Mexico, and the company is also closing in on a deal to build factories in Indonesia.
Learn more about Semi and Cybertruck
Tesla finally unveiled its first production versions of the long-delayed Electric Semi in December, handing Pepsi’s first orders for 100 trucks, which the company ordered in 2017. A number of high-profile companies, including Anheuser-Busch, Pepsi, Walmart, and UPS have also booked Semis, so we might get updates on production and when those companies can expect deliveries.
Tesla’s Cybertruck has also suffered multiple delays, but Musk said in July that the company was on track to launch the truck by the middle of this year. We look forward to further updates on the calendar, as well as new features. In September, Musk said the Cybertruck would be “waterproof enough to serve as a boat briefly.”