U.S.-based electric vehicle (EV) maker Tesla reported a net income of $2.4 billion in the fourth quarter (Q4) of the financial year (FY) 2023, a 39% year-over-year (YoY) decline.

The company posted a 3% YoY growth in revenue at $25.1 billion for the October-December quarter. Tesla attributed it to increased vehicle deliveries and other business parts, including energy storage.

Revenue increased due to more vehicle deliveries and growth in other business areas. The positive impact of foreign exchange also played a role.

However, the average selling price of vehicles decreased YoY because of pricing and mix factors, and there was less recognition of revenue from full self-driving (FSD).

The company’s operating income decreased to $2.1 billion in Q4, resulting in an 8.2% operating margin.

This decline in operating income was mainly due to a lower average selling price of vehicles, increased operating expenses related to artificial intelligence and research and development projects, reduced FSD revenue recognition, and the costs associated with ramping up production of the Cybertruck.

The company noted positive cost savings per vehicle, including lower raw material and logistics costs and benefits from the IRA credit.

Tesla’s adjusted Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) fell 27% YoY to $3.9 billion in Q4.

Full Year 2023

In 2023, Tesla reported a total net income of $10.8 billion, reflecting a 23% decrease compared to the previous year.

The company’s total revenue for 2023 amounted to $96.77 billion, representing a 19% YoY growth from $81.4 billion.

The adjusted EBITDA for 2023 was $16.6 billion, marking a 13% year-over-year decrease.

Company CEO Elon Musk said, “Tesla team did an incredible job in 2023. We achieved record production and deliveries of over 1.8 million vehicles in line with our official guidance. And in Q4, we were producing vehicles at an annualized run rate of almost 2 million cars a year. This is really a phenomenal achievement.”

“We had a great year with record production, record deliveries, and a strong free cash flow in spite of a very high-interest rate environment,” Musk added.

Electric Vehicles

In 2023, the company delivered 1.2 million “Model Y” vehicles, establishing it as the top-selling vehicle globally. Despite recording the highest capital expenditures and R&D expenses in its history, free cash flow remained at $4.4 billion.

The cost of goods sold per vehicle declined sequentially in Q4. The team at Tesla aims to focus on scaling production, investing in growth, and identifying further cost efficiencies in 2024.

Towards the end of December, the company introduced “V12 of FSD Beta,” which utilizes data from a fleet exceeding one million vehicles. This advanced system employs AI to control various vehicle functions.

Energy Storage

In Q4, energy storage deployments sequentially decreased to 3.2 GWh, contributing to a total deployment of 14.7 GWh in 2023, more than double, marking a 125% surge compared to the previous year, while Energy Generation and Storage business profits nearly quadrupled in 2023.

“Tesla team did an incredible job in 2023. We achieved record production and deliveries of over 1.8 million vehicles in line with our official guidance. And in Q4, we were producing vehicles at an annualized run rate of almost 2 million cars a year. This is really a phenomenal achievement,” Musk said.

Despite anticipating ongoing volatility in sequential deployments due to logistical factors and the global distribution of projects, the expectation is for sustained growth on a trailing twelve-month basis. The ongoing effort involves the gradual scaling of the 40 GWh megafactory in Lathrop, California, aiming to reach full production capacity.

In May last year, the company started the construction of its 50 GWh in-house lithium refinery in the greater Corpus Christi region of Texas, representing an investment of over $1 billion.

Solar

Solar deployments by Tesla declined by 59% YoY to 41 MW during the third quarter. The persistent high-interest rates have led to a continued decline in solar demand throughout Q4. Profits for the quarter were adversely affected by reduced installations and seasonal fluctuations in solar energy generation.

The company reported a net income of $2.3 billion in the third quarter of FY 2023, a 36% YoY decline.

The company reported a net income of $2.7 billion in Q2 2023, a 20% YoY increase due to increased vehicle deliveries and other business parts, including energy storage and solar project deployments.