Tesla makes record profit, despite inflation, price cuts and Elon Musk’s chaotic leadership

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Electric car maker Tesla has made record profits for 2022 despite inflation, price cuts to boost sales and the erratic leadership of company chief Elon Musk.

The company said it posted record sales, operating income and net profit in the last quarter of 2022 thanks to price cuts and cheaper models, results that beat analysts’ forecasts.

That helped drive a record 1.31 million vehicle deliveries last year, though production jumped nearly half to 1.36 million vehicles.

For the whole of 2022, sales increased by half to $81.5 billion ($115 billion), while net income more than doubled to $12.6 billion ($17.7 billion), and operating margins increased nearly 17 percent over the year.

“This margin expansion was achieved through the introduction of lower cost models, built in localized, more efficient factories, vehicle cost reduction and operational leverage,” Tesla said.

The company made $3.7 billion ($5.2 billion) in profit from October to December, nearly two-thirds more than in the December 2021 quarter after quarterly revenue rose 37 percent to $24.3 billion ($34.2 billion). billion).

That came despite delayed vehicle deliveries and COVID-19 shutdowns in China during the last few months of 2022, which squeezed profit margins in the fourth quarter.

On a conference call to discuss the results, a coy Mr. Musk praised the Tesla team for the record results that, he said, came despite “enforced closures, very high interest rates and many supply challenges”.

“It’s been a fantastic year for Tesla, our best year ever,” Musk said. “All of these records faced enormous difficulties.”

A Tesla showroom in Shanghai, China. (Reuters)

The automaker slashed prices in the US and China, its two largest markets, by up to a fifth on some models, with investors and analysts speculating that the move reflected lower demand due to rising interest rates.

Mr. Musk addressed the concerns, saying demand far outstrips production and that Tesla had seen the strongest orders for January so far.

“A huge number of people want to buy a Tesla car but can’t afford it, but these price changes are really making a difference to the average consumer,” he said.

The company expects to sell 1.8 million Tesla cars this year, though Musk went further and confidently predicted that 2 million cars could be sold, despite a likely recession and high inflation.

Some listeners were skeptical of that bullish forecast on Twitter.

Tesla also assured investors that it had a handle on the uncertain economic environment, although it may not have a handle on Mr. Musk.

“As we progress into 2023, we know there are questions about the near-term impact of an uncertain macroeconomic environment and, in particular, with rising interest rates,” the company said.

“The Tesla team is used to challenges given the culture it takes to get the company where it is today.”

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