Tesla shares recouped some of their losses in January after the company slashed prices on most of its electric cars in the United States and Europe to revive sales. The price of a Model 3 sedan, the least expensive Tesla, dropped by $3,000, selling now for $44,000 in the United States before government incentives.
The markdowns appear to have prompted a surge in orders and helped reassure investors that Tesla had a plan to retain its dominance in electric cars. Tesla faces a stronger challenge from established car companies like Hyundai, Ford Motor, General Motors and Volkswagen, which are selling more battery-powered vehicles and at lower prices than Tesla.
Although the price cuts helped to promote sales, they also took a toll on Tesla’s profit margin. The gross profit margin on car sales slipped to 26 percent in the fourth quarter from 28 percent in the third quarter of 2022 and 31 percent in the fourth quarter of 2021.
Tesla said on Wednesday it would begin production of its long-awaited Cybertruck by the end of the year, although it won’t be able to ramp-up manufacturing of large numbers of the vehicle until 2024. Delays in the truck, which was unveiled in 2019, have allowed rivals like Rivian and Ford to beat Tesla to market with electric pickups.
“The fact the Cybertruck is on schedule is a big positive,” Garrett Nelson, senior equity analyst at CFRA Research, said in a note to clients.
Net profit for the quarter was $3.7 billion, up from $3.3 billion in the third quarter, Tesla said. For the full year, Tesla’s profit more than doubled to $12.6 billion from $5.5 billion in 2021. Sales for the year, including revenue from solar panels, energy storage and other businesses, rose to $81.5 billion from $53.8 billion the previous year.
Tesla said it expected to produce 1.8 million cars in 2023, up from 1.4 million in 2022. That would be a more modest rate of growth than in 2022, when production increased by nearly 50 percent.