Tesla Q4 Earnings Review

Tesla reported earnings on Wednesday the 24^th after the market closed. During the quarter, the company generated 25.16bn in revenue, the highest it has ever achieved, growing at 3.5% on a yearly basis.

Deceleration since the second quarter of 2021 has been notorious and persistent. At the same time, management called for lower growth in 2024 than in 2023, for which the quarterly trend might be expected to somewhat revert, but not too sharply. For some perspective, deliveries in 2023 ended up at 1.808 million, growing 38% YoY, while total revenue increased by 19% to exceed 96bn.

“In 2024, our vehicle volume growth rate may be notably lower than the growth rate achieved in 2023” Q4 Shareholder Deck

Source: Self-made with Tesla’s quarterly shareholder decks

Due mostly to price cuts and the impossibility of achieving a similar magnitude of cost reduction, Tesla’s margins have been under pressure for the past 2 years. In this last quarter, Tesla generated 4.43bn in gross profit, implying a margin of 17.6%, which was down 610bps YoY and slightly sequentially. Operating income was 2.064bn, meaning the OPM stood at 8.2% for the quarter, down 780bps YoY, but up 60bps QoQ. Lastly, the company generated 7.92bn in GAAP net income, though non-GAAP was 2.48bn. The discrepancy is mostly a tax-related element, for which I plotted the latter.

Note: Interestingly, Tesla used to report a chart illustrating its operating margin compared to the S&P and industry. This quarter, they did not display it, implying perhaps that margin pressure will continue.

Source: Self-made with Tesla’s quarterly shareholder decks

Turning to the cash flow statement, Tesla brought in 4.3bn in cash from operating activities, up from last year’s 3.27bn. This puts 2023’s operating cash flow at 13.25bn, decreasing from 2022’s 14.72bn. On the other hand, capital expenditures were slightly above 2.3bn, in line with the previous quarters. Management mentioned they expect CapEx to be in excess of 10bn for 2024.

Source: Self-made with Tesla’s quarterly shareholder decks

Moving forward, I will break down Tesla’s segments, followed by management’s commentary and my take on the current quarter.