Tesla Inc. entered Its earnings day is under a cloud, and some of what investors feared came to light on Wednesday as the electric car maker warned it may grow more slowly this year to focus on the next generation of its vehicles.
The 2024 vehicle volume growth rate “may be significantly lower than the growth rate achieved in 2023, as our teams work to launch the next-generation vehicle at our Texas Gigafactory,” the electric car maker said in a letter to shareholders accompanying the fourth. Quarter results after the bell Wednesday.
The company is between “two major waves of growth.”
TSLA stock,
It fell 8% in premarket trading on Thursday, after falling 16% at the start of the year.
On a call with analysts after the results, CEO Elon Musk echoed that in the interim, adding that Tesla will make sure the next wave is executed “as best as possible.”
Musk said that the company has come a long way in developing the next-generation car and is currently planning to start production in the second half of 2025, adding that after starting production in Texas, the future factory in Mexico will likely be the latest. EV company's second production site.
He said Tesla will identify other locations outside North America at the end of the year.
In the fourth quarter, Tesla earned $7.9 billion, or $2.27 per share, compared to $3.7 billion, or $1.07 per share, in the same period last year. After adjusting for one-time items, the electric car maker earned 71 cents per share.
Sales rose 3% to $25.17 billion, from $24.32 billion a year ago, as higher auto sales and growth in other parts of the business were offset by a lower average vehicle selling price and lower revenue recognition from “full self-driving,” a group Tesla of technology. Advanced driver assistance systems for urban driving.
Analysts surveyed by FactSet expected the electric car maker to report adjusted earnings of 73 cents per share on sales of $25.6 billion. The error sent the stock down more than 5% in after-hours trading.
Tesla's gross margins fell to 17.6% from 23.8% in the fourth quarter of 2022.
Barclays analyst Dan Levy said this year's volume forecast was “inconclusive.” “Overall, with the largely negative outlook in print, it can be said that the outcome is not as bad as feared, although there are a number of questions to be answered,” he said in a note on Wednesday.
The “big positive” is that Tesla has confirmed its next generation of electric vehicles, said CFRA analyst Garrett Nelson.
“The guidance is not that surprising, as we believe Model Y sales growth will slow after a very strong year, and we are being cautious in managing expectations regarding Cybertruck ramp-up,” he said.
For Karl Brauer, an analyst at iSeeCars.com, the problems go beyond Wednesday's print run.
“We are watching a company and an industry go from high growth and high aspirations to modest, predictable growth with increased competition and decreased opportunities for each participant,” Brauer said.
“Tesla’s latest numbers reflect its diminishing market dominance and the challenges it faces in attracting mainstream consumers,” he said.
In the letter to shareholders, Tesla emphasized that it expects the Cybertruck's ramp to be “longer than other models due to the complexity of manufacturing.”
The next-generation car, about which few details are known, has been called the Model 2. The question of whether the new electric car will be launched by 2025 was the top query on Tesla's investor relations website.
“We are focused on bringing the next generation platform to market as quickly as possible, with a plan to begin production at Gigafactory Texas. This platform will revolutionize how vehicles are manufactured,” the company said in the letter.
Investors first got official word on a next-generation car last March, as Tesla and CEO Elon Musk held an investor day to promote “Master Plan 3.”
See also: Apple said it is working to reduce the features of Apple's self-driving cars
Tesla stock has gotten off to a rocky start to the year, falling more than 16% this month, versus a 2% gain for the S&P 500 SPX..
Its shares have risen more than 44% in the past 12 months, outpacing the S&P 500's gain of about 21%.
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