Tesla CEO Elon Musk said Wednesday that the company’s aggressive price cuts have triggered a wave of demand for its electric cars. The statement eased fears that a weak economy would dampen buyer interest.
Tesla reported fourth-quarter revenue and profit earlier Wednesday that beat Wall Street expectations, despite a sharp drop in profit margins in its auto business. The company is trying to reassure investors that it can cut costs and continue to generate cash amid increased competition in the year ahead.
This month’s steep price cuts have made Tesla the instigator of a price war, but the company is forecasting car sales will grow 37 percent this year to 1.8 million units, down from 2022 growth. Tesla’s sales outlook has become a focus of investor attention at a time of global economic weakness. The company’s long-term goal is to achieve a 50 percent compound annual sales growth rate.
Musk addressed the issue at the start of a conference call with investors and analysts. These price adjustments are really having an impact on the average consumer,” he said. He added that demand in January was about twice as high as production. Without external disruptions, Tesla could reach 2 million units in 2023. 1.31 million units were delivered in 2022.
Musk: Price cuts have significantly boosted demand. 2023 sales could reach 2 million Tesla acknowledged concerns about economic uncertainty and said it will “accelerate our cost-cutting roadmap and drive higher productivity” in the near term.
Tesla CFO Zach Kirkhorn (Zach Kirkhorn) said the price cuts will weaken profitability, but margins should improve as the company reduces costs.
As of Wednesday’s close, Tesla shares were up 0.38 percent. Tesla shares rose 4.3 percent after hours following the earnings report.
