Tesla falls short of earnings expectations in Q4 2023, despite strong vehicle deliveries

Tesla, the electric vehicle manufacturer, reported disappointing earnings in the fourth quarter of 2023, falling short of analyst expectations. Despite launching a new vehicle and announcing another for 2025, Tesla was unable to overcome its disappointing third quarter. In Q4 2023, the company generated $25.1 billion in revenue and posted earnings of $0.71 per share, missing analyst predictions of $25.76 billion in revenue and earnings of $0.74 per share. Although revenue increased by 3% compared to the previous year, Tesla expects the growth rate of its vehicle volume to be lower in 2024, causing its shares to drop in aftermarket trading. Analysts have described the quarter as underwhelming, pointing out a significant miss on automotive gross margins.

Tesla had a disappointing third quarter, earning $690 million less than analysts had predicted due to a decrease in vehicle deliveries. However, investors were pleased when the company announced that it had delivered 484,000 vehicles in the fourth quarter, surpassing expectations. Tesla’s total vehicle deliveries for 2023 grew by 38% year-over-year, despite a decline in demand for electric vehicles in the overall industry.

The fourth-quarter results mark the end of a shaky start to the year for Tesla. In the first two weeks of January, the company experienced its second-largest decrease in market valuation since going public in 2010, losing over $94 million. The dip has been attributed to price cuts on Chinese-manufactured vehicles, rising labor costs, and ongoing negative news about the company. Recently, Tesla owners across the US complained about difficulties charging their vehicles or experiencing complete battery drainage during extremely cold temperatures.

To increase demand for its vehicles and undercut EV competitors, Tesla reduced vehicle prices over the past year. However, this move has impacted its profit margins, especially as the company raised worker wages across its US manufacturing plants. Tesla announced pay raises after the United Auto Workers Union expressed its intent to organize at least one Tesla auto plant.

Tesla’s recent earnings call marked the first report since the launch of its pickup truck. Elon Musk, CEO of Tesla, expressed enthusiasm about the truck’s demand and predicted the company could deliver around a quarter of a million Cybertrucks annually in North America.