Tesla’s profit growth is continuing at cruising speed. Publishing its final quarter results from 2022 after the bell, the EV maker reaped an annual profit of 12,6 billion dollars (11,5 million euros). This new record represents a rise of 128% compared to the year before. Margins, however, are gradually falling. So, while the company more or less meets its growth targets, it earns less per model sold.

A look at the results from Tesla’s last financial year gives a clear snapshot of how it is evolving and how it must navigate the challenges of becoming a world-size carmaker. Surely, it’s an achievement, having raised total income by 51% ($81,5 billion) in a year that was troubled by supply chain shortages, lockdowns in the Shanghai factory, and unprecedented cost spikes for energy and raw materials like lithium.

Beating Wall Street

The sunny figures also popped up in Tesla’s final quarter, with revenue rising a whopping 37% compared to the year before. It beats earlier forecasts from Wall Street and files again for a record. Compared to Q3, the increase is 13%.

But the numbers also explain why Tesla slashed prices by up to 20% worldwide on its model. The company failed to meet its earlier promise of 50% growth per year – though Musk reiterated that goal in a shareholder deck for the coming years – and the company actually produced more than it delivered, earmarking a slowing demand. It left the company with more than 71 000 unsold cars last year.

Bigger than Audi

Another noticeable figure is that the gross margins are falling. They came in at 25,9% last year, the lowest of the last five quarters. Tesla explained this by stating that this “affordability” is quintessential if the company wants to become a mass-producing brand in the medium run.

Where does it stand? In 2022, Tesla produced 1,36 million cars, the overwhelming majority Model 3 and Model Y (1,29 million), representing an increase of 40% – and not 50% as projected. CEO of Tesla, Elon Musk, said that the company is fully equipped to assemble 2 million vehicles in 2023, which would make the company bigger than Audi.

The target, however, for this year is 1,8 million vehicles. Musk considers that there’s always some unpredictable setback happening “somewhere in the world”, but the margin of 200 000 units means his company is prepared. “Also for uncertainties,” he added.

Profit from competitors

Musk further commented on the price drops, which leaves competitors’ reactions dangling, claiming that demand in January 2023 is higher than the output of his company can handle. “The vast number of people that want to buy a Tesla car can’t afford it. And so these price changes really make a difference for the average consumer,” he added.

Noticeably, Tesla also gained a profit increase from regulatory credits. These are purchased by competitor carmakers who need to meet their CO2 targets. The estimated backfall isn’t happening yet, since that profit rose by 21% year-to-year to $467 million during the last quarter of 2022.

Outlook for 2023

While 2023 is about further ramping up worldwide production – the company announced an investment of $6,3 billion in its Nevada factory two days ago – there’s also product news. Musk said that the Austin factory is in a tooling process for the assembly of the Cybertruck, confirming the schedule for a production start at the end of the year.

Conclusion? Looking at Tesla’s balance – not to mention the storm around Musk’s Twitter affair last year – his car company is on track and sticks to a strategy keeping it one step ahead of the others. In a nutshell: it’s doing great.