Tesla Q4 2023 Earnings: Another Profitable Quarter, But Below Expectations

 

Tesla's Q4 2023 earnings report is out, and while the electric automaker continues its streak of profitability, it fell short of expectations on both revenue and profit per share.

Key Takeaways:

• Profit: $0.71 per share (Non-GAAP) vs. expected $0.73 to $0.74
• Revenue: $25.167 billion vs. expected $25.598 to $25.640 billion
• Deliveries: 484,507 vehicles in Q4, 1,808,581 for the year
• Production: 494,989 vehicles in Q4, 1,845,985 for the year
• Free cash flow: $4.4 billion in 2023
• Gross profit: Services & Other business increased from ~$500 million loss in 2019 to ~$500 million profit in 2023
• Cost of goods sold: Declined sequentially in Q4

Profit and Revenue Miss Expectations

While Tesla's 17th consecutive quarter of profitability is certainly impressive, the company's bottom line fell short of what analysts were expecting. Profit per share came in at $0.71, compared to the expected range of $0.73 to $0.74. Revenue also missed expectations, at $25.167 billion versus the expected $25.598 to $25.640 billion.

Tesla Highlights Positives Despite Miss

Despite missing expectations, Tesla pointed to several positive aspects of its Q4 and 2023 performance. The company's free cash flow remained strong at $4.4 billion in 2023, even as it invested heavily in future growth projects. Tesla also highlighted the turnaround of its Services & Other business, which went from a $500 million loss in 2019 to a $500 million profit in 2023. Additionally, the cost of goods sold per vehicle declined sequentially in Q4.

Deliveries and Production Remain Strong

Tesla's deliveries and production numbers continue to impress. The company delivered a total of 484,507 cars in Q4, with the Model 3/Y making up the bulk of that figure at 461,538. For the entire year, Tesla delivered 1,808,581 cars, with production hitting 1,845,985.

Looking Ahead

Tesla's Q4 2023 earnings report is a mixed bag. While the company missed expectations on profit and revenue, it continues to deliver strong numbers in terms of deliveries, production, and free cash flow. The turnaround of the Services & Other business is also a positive sign. Looking ahead, it will be interesting to see how Tesla navigates the challenges of a slowing economy and increased competition in the electric vehicle market.

Conclusions

• Impact of price cuts: Tesla cut prices on several of its models in early 2023. This likely helped to boost deliveries, but it also put pressure on profitability.
• Competition: The electric vehicle market is becoming increasingly crowded, with new players entering the market all the time. Tesla will need to continue to innovate and improve its products in order to maintain its market share.
• Cybertruck: The much-anticipated Cybertruck is finally expected to be released in 2024. This could be a major boost for Tesla's sales and profits.
• FSD (Full Self-Driving): Tesla's FSD program has been controversial, with some critics arguing that it is not yet safe for public roads. However, Tesla continues to make progress on FSD, and it could be a major revenue driver for the company in the future.