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Tesla notes interest rate worries as yields rise

by SuperiorInvest

Key things

  • Tesla ( TSLA ) reported Q4 2022 earnings after the closing bell on January 25, 2023.
  • The electric car maker posted its highest-ever quarterly revenue and beat profit estimates.
  • The company drew attention to uncertainties regarding the macroeconomic environment, especially the impact of higher interest rates.

Tesla (TSLA) reported record quarterly sales, net incomeand operating profitwhile raising concerns about the impact of higher interest rates on its business.

Tesla reported fourth-quarter earnings of $1.19 per share, with revenue up 37% to $24.32 billion. Both beat analysts’ estimates. Net income jumped 59% to $3.69 billion and operating profit rose 49% to $3.90 billion.

The automaker noted that it has improved operating margin to 129 basis points (bps) a year ago. Tesla attributed this to introducing cheaper models, building localized, more efficient factories, operating leverage and reducing vehicle prices. It pointed out that its average selling price has been “on a downward trajectory” for many years and that “affordability needs to be improved to become a multi-million dollar vehicle manufacturer”.

Uncertain environment

The company noted that “there are questions about the near-term impact of an uncertain macroeconomic environment,” particularly rising interest rates. He added that the automaker is “accelerating our cost-cutting plan and moving toward higher production speeds.”

Tesla added that it expects to produce about 1.8 million cars in 2023, ahead of its target of 50%. compound annual growth rate (CAGR).

On the same day that Tesla released its results, The Wall Street Journal reported that Ford (F) negotiated the sale of the production plant in Saarlouis, Germany, to the Chinese electric car manufacturer BYD. The potential deal could signal a shift in the competitive landscape in the European electric vehicle market, where Tesla has also penetrated through its factory in Berlin.

Tesla shares rose 0.6%. extended trading.

YCharts


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