Tesla shares pared some of their losses in January after the company slashed prices on most of its electric vehicles in the U.S. and Europe to revive sales. The price of the cheapest Tesla Model 3 sedan dropped $3,000 and now costs $44,000 before U.S. government incentives.
The price cut appears to have spurred a surge in orders and reassured investors that Tesla has plans to maintain its dominance in the electric vehicle space. Tesla faces greater challenges from established car companies such as Hyundai Motor, Ford Motor, General Motors and Volkswagen AG, which sell more electric vehicles at lower prices than Tesla.
While the price cuts helped boost sales, they also took a toll on Tesla’s profit margins. Gross profit margin on auto sales slipped to 26% in the fourth quarter from 28% in the third quarter of 2022 and 31% in the fourth quarter of 2021.
Tesla said on Wednesday it will begin production of its long-awaited Cybertruck by the end of this year, though it won’t be mass-producing the vehicle until 2024. In 2019, rivals like Rivian and Ford beat Tesla in the electric pickup market.
“The fact that the Cybertruck is on schedule is a big positive,” Garrett Nelson, senior equity analyst at CFRA Research, said in a note to clients.
Tesla said net income for the quarter was $3.7 billion, up from $3.3 billion in the third quarter. For the full year, Tesla’s profit more than doubled to $12.6 billion from $5.5 billion in 2021. Full-year sales, which include revenue from solar panels, energy storage and other businesses, rose to $81.5 billion from $53.8 billion the previous year.
Tesla said it expects to produce 1.8 million vehicles by 2023, up from 1.4 million in 2022. That would be more modest than the nearly 50% increase in output in 2022.