Tesla on Wednesday posted record net income in the fourth quarter of last year, and the company predicted that additional software-related profits will keep its margins higher than any other automaker.
The Austin, Texas, maker of electric vehicles and solar panels said it made $3.69 billion from October through December, or an adjusted $1.19 per share. That beat estimates of $1.13 that had been reduced by analysts, according to FactSet. The company's profit was 59% more than the same period a year ago.
But the company's automotive gross profit margin, which is revenue minus cost of goods sold, fell from 30.6% in the fourth quarter of 2021 to 25.9% in the same period in 2022. its two biggest markets, by up to 20% on some models, leading many analysts to believe that demand had fallen due to high prices and rising interest rates.
Morgan Stanley analyst Adam Jonas wrote in a note to investors early Wednesday that demand is a problem for the company."In our view, the price cuts are indeed a response to slowing incremental demand relative to incremental supply," he wrote. The company said it knows there are questions about macroeconomics in the face of rising interest rates."In the near term we are accelerating our cost reduction roadmap and driving towards higher production rates, while staying focused on executing against the next phase of our roadmap," the letter said.
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