In 2023, with frequent price wars for new energy vehicles, Tesla finally achieved its goal of delivering 1.8 million vehicles for the whole year through a strategy of reducing prices and maintaining quantity, and set a new sales record in the fourth quarter. However, behind this, Tesla paid the price of declining profits.
On January 25th, Tesla released its 2023 financial report, which showed that Tesla's total revenue for the year reached $96.773 billion, a year-on-year increase of 18.79%; The net profit attributable to common shareholders was 14.997 billion US dollars, a year-on-year increase of 19%; The net profit attributable to common shareholders under non GAAP was $10.882 billion, a decrease of 23% year-on-year, while Tesla also experienced its first annual profit decline since 2017.
2024 means new pressure for Tesla. On January 12th, Tesla China announced a price reduction for the Model 3 and Model Y, and this is not the first time Tesla has lowered prices.
Although price reduction can be exchanged for increased delivery volume and beautiful revenue figures, it is ultimately not a long-term solution. Goldman Sachs analysts have pointed out that although the company has long-term growth potential, it faces significant risks in the short term. Tesla, whose profitability is declining, saw its gross profit margin drop directly to 18.2% in 2023, a decrease of 7.35 percentage points from 25.55% in 2022.
The growth rate in 2024 may be lower than last year
According to Tesla's financial report, in 2023, Tesla's total revenue reached $96.773 billion and net profit was $14.997 billion, an increase of 19% compared to 2022.
It is not difficult to see through comparison that Tesla's performance growth is slowing down. In 2021 and 2022, Tesla's operating growth rates reached 70.67% and 51.35%, respectively, with net profit growth rates reaching 127.51% and 665.48%. It can be seen that Tesla is braking slowly while driving on the highway lane.
While performance growth is slowing down, Tesla's gross profit margin is also gradually declining. Since the beginning of 2023, Tesla's gross profit margin for the first three quarters has been 19.34%, 18.2%, and 17.9%. According to the financial report released in the fourth quarter, Tesla's gross profit margin has declined to 17.6%. Compared to the same period last year, the gross profit margin in the fourth quarter decreased by more than 6.2 percentage points.
It is worth noting that Tesla did not provide specific guidance on 2024 performance as usual, but instead vaguely warned that the growth rate in 2024 may be significantly lower than last year.
Good sales cannot stop the decline in market share
Over the past year, Tesla has been trying to maintain car sales by lowering prices. It is understood that Tesla launched price reduction promotions in multiple countries and regions last year. In the Chinese market, the average transaction price of Tesla Model 3 has decreased by 34000 yuan to 262000 yuan compared to 2022; The average transaction price of Model Y has decreased by nearly 50000 yuan, entering within 300000 yuan.
Driven by multiple price reduction measures, Tesla delivered 484500 vehicles in the fourth quarter of 2023, a significant increase from 435100 vehicles in the third quarter. In the end, Tesla completed the delivery of 1.8086 million vehicles in 2023. Tesla delivered 936200 and 1314000 vehicles in 2021 and 2022, respectively. Although Tesla has maintained a continuous historical high in car sales, this is an increase in sales volume achieved through the damage to Tesla's profitability, which ultimately cannot stop its market share decline.
In Tesla's headquarters in the United States, Korean manufacturers Hyundai and Kia have developed into Tesla's strongest competitors. Although Tesla still dominates, Hyundai and Kia have seen their market share decline by about 10% due to the continuous launch of new models and large purchase subsidies.
On the other hand, in the Chinese market, due to the technological upgrades, iterative updates, and rapid sales of domestic brands such as BYD, Tesla's market share in China, which has been under siege, has increased from 15% in 2020 to 10% in 2022, and then to only 7.8% in 2023.
During the earnings conference call, Musk praised Chinese automakers as the world's most competitive car companies and stated that without setting trade barriers, Chinese automakers would "demolish" most of their competitors globally.
At the same time, Tesla's management has realized its relative lag in iteration speed. During the financial report conference call, Musk revealed many details of the new product to the outside world.
Musk and management stated that Tesla's goal is to launch the next generation of electric vehicles by the end of 2025, including a lower priced model that will adopt an unboxed assembly process. According to Musk, this system will be faster, more efficient, and more cost-effective. "Once put into production, this model will be far ahead of any other manufacturing technology in the world, representing a higher level of expertise," Musk said.
However, considering the multiple ticket jumps and delays in previous projects such as Cybertruck, FSD, and the Mexican factory, it is still uncertain whether Musk's leading next-generation car can be launched in 2025, and Tesla's price reduction strategy is currently approaching its limit. There are still nearly two years until the next generation of Tesla is released, and the direction of Tesla during this gap remains to be tested.