After years of rapid growth, Tesla now faces many challenges as demand for electric vehicles slows and competition increases.
On January 24, the US electric car company Tesla announced its revenue and profit for the fourth quarter of 2023. Both figures fell short of analysts' expectations.
Revenue increased only 3% year-on-year to $25.17 billion. Operating profit margin was 8.2%, half of the same period in 2022, although slightly higher than in the third quarter of 2023. Gross profit margin for the auto segment (excluding profits from selling emission credits) was only 17.2%, far below previous years.
Auto sales growth slowed in part because Tesla slashed prices in the second half of last year. Net income last quarter was $7.9 billion, double the year-ago figure. But the increase was largely due to tax deductions.
Tesla Model Y cars at a factory in Germany in March 2022. Photo: Reuters
Shares of the automaker fell 6% in after-hours trading following the news. They are down 16% year-to-date.
Tesla said sales growth this year “may slow significantly” compared to last year, as it works to launch “a new generation of vehicles.”
Tesla says it is “in the middle of two major growth waves.” One is the wave following the Model 3 and Model Y launches in 2017 and 2020. The other is the wave that will begin with the next-generation vehicle it is working on.
Wall Street forecasts Tesla will sell 2.2 million cars this year, up 21% from 2023, but below the 50% long-term target Musk set three years ago.
After years of rapid growth, Tesla is now facing shrinking profit margins due to slowing demand for electric vehicles and increased competition. "If sales decline further, I expect Musk to continue to cut prices to gain market share, which will further reduce profit margins," Gary Bradshaw, portfolio manager at Hodges Capital Management, told Reuters.
Tesla’s vehicle manufacturing costs also continued to fall in the fourth quarter, as the company faces pressure to launch new, even cheaper models.
On January 24, Tesla CEO Elon Musk also predicted that Chinese automakers will have great success globally. "Without trade barriers, they will crush almost every other automaker in the world ," he said. Globally, BYD (China) sold more electric cars than Tesla in the fourth quarter of 2023.
Ha Thu (according to Reuters)
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