Tesla slows, accounts disappoint. Musk: without tariffs the Chinese will demolish us

Tesla opens the gates to disappointing quarterly earnings and revenues, predicts new slowdowns in the year that has just begun, and the stock comes under pressure: -12% on Thursday 25 January, with the capitalisation receding to $600 billion and down $210 billion since the start of the year. The Elon Musk brand is the only one of the Magnificent Seven US tech groups to have shifted into reverse gear since the start of the year: during the period, while the other six giants drove Wall Street indices to new records, it fell 25%, shaken by fears over demand in the sector, growing competition, especially from China, and stock market valuation.

Tesla reported a 40% drop in profits, excluding extraordinary items, to 71 cents per share in the latter part of 2023, compared to the 73 cents expected. A 5.9 billion tax benefit inflated net profits, making them more than double from 3.7 billion to 7.9 billion. For the year, earnings per share slipped 23 per cent. Tesla's quarterly revenues, for their part, rose 3 per cent to $25.17 billion, marking the slowest pace of growth in more than three years. According to LSEG data, analysts had expected an average increase of 5 per cent to $25.62 billion.

The company also reported a gross margin of 17.6% for the three months ended December, the lowest since 2019, compared to 23.8% a year earlier and the average analyst estimate of 18.3%. In the third quarter, Tesla had posted a gross margin of 17.9%. Penalising profitability were price cuts and incentives to support demand, which also translated into record deliveries in the quarter. Tesla delivered 1.8 million vehicles in 2023, up 38 per cent.

Over the past year in the US it has reduced the price of the Model Y, its most popular and best-selling vehicle in the world with 1.2 million units, by up to 26.5%. However, Tesla's global efforts were not enough to fend off the advance of rivals: for the first time Tesla ceded its place as the leading electric vehicle manufacturer in terms of sales to China's BYD in the fourth quarter.

Tesla's CEO, Elon Musk, warned on Wednesday, commenting on the financial results, that Chinese automakers will "demolish" global rivals without trade barriers. "Protectionism and tariffs are the only thing that will stop the dominance of Chinese automakers," Musk said, highlighting the pressure the US electric vehicle market leader faces from companies just like BYD, which are racing to expand worldwide.