No matter supply chain problems, factory delays and a falling share price, Elon Musk’s forecast for Tesla’s profitability is “pretty good”.
The electric car company boss was in excited shape during the fourth quarter earnings call. Tesla’s self-management capability would, he said, be the most in-depth software update in history. Optimus, his faceless human-like robot, may one day obscure the automotive industry.
Of course, none are available yet. But Musk’s flashy flights are being more widely received now that fears about Tesla’s funding have faded. Increased scale and sales of Model Y cars, which are more expensive than Model 3s, help keep operating margins in double digits.
At 14.7 percent, it was just slightly above the previous quarter. Rising costs included a generous award to the boss.
But the company is also abandoning its reliance on promoting profits with carbon credit sales. It accounted for less than 2 percent of $ 17.7bn revenue in the past quarter – down from 4 percent the previous year.
Tesla has entered 2022 with questions to answer about new products. Where is the sci-fi look Cyber truck which was unveiled in 2019, for example. And when will it start producing the cheaper $ 25,000 cars after which it skimmed.
Do not hold your breath. Tesla has made it clear that the focus this year is on scaling up existing product output.
Buyers may be disappointed, but those who would like to see margins increase will rejoice. Operating costs have already risen by 50 percent over the previous year as new factories are developed in Germany and Texas. Adding more models to the mix can further enhance them.
For all the talk of supercomputers and robots, it is vehicle production that will determine the company’s share price in the near future.
That of Tesla brand far surpasses its sales. Last year, it sold 936,000 vehicles. That equates to about 1 percent of cars sold around the world, according to IHS Markit estimates. But capacity is on course to expand. Analysts expect it to deliver 1.5 million vehicles this year. If it can exceed the figure, the share price should rise.