Latest World News

Tesla breaks records, Musk warns of recession


The US electric car maker Tesla earned more in 2022 than ever before in a financial year. But the outlook is anything but rosy – tech billionaire Elon Musk sees a “difficult recession” coming.

Billionaire Elon Musk’s electric car group made record profits last year despite ongoing logistics problems and falling demand. Net income jumped 128 percent to $12.6 billion in 2022. In the fourth quarter, profit was $3.69 billion, up 60 percent.

Own target missed

“The fourth quarter of 2022 was another record quarter and 2022 was another record year,” Tesla said. The company was able to sell more than 1.3 million electric cars last year – an increase of 40 percent compared to the previous year and more than ever before.

However, Tesla missed its self-imposed goal of increasing deliveries by 50 percent for the year as a whole. In the three months to the end of December, deliveries only grew by 31 percent compared to the previous year.

Mixed outlook

And what about 2023? “We’re probably going to have a very difficult recession,” Tesla CEO Elon Musk warned. Should this happen, however, the material costs should also drop significantly.

Another factor: Continued interest rate hikes by the major central banks could make financing car purchases even more difficult. Management knows there are questions about the “uncertain economic environment,” Tesla said in its letter to shareholders.

Musk thinks price cuts are necessary

In recent months, Tesla has slashed the prices of its cars by up to 20 percent to boost sales, first in China and then in Europe and the US. Tesla said on Wednesday that such an approach is necessary to become a manufacturer that builds several million vehicles.

“The price cuts really make a difference to the average consumer,” Musk said at the start of the conference call with investors and analysts. Demand was about double production in January and sales could reach the two million mark this year barring external disruptions.

Tesla stock in demand again?

Despite the rather mixed outlook, Tesla shares surged in US after-hours trading, gaining 5.5 percent. The paper had suffered massively in the past year and lost 65 percent in value. Only short-term speculators had made Tesla rich in 2022.

Musk’s escapades surrounding the controversial takeover of the online platform Twitter and his Tesla share sales to finance the approximately $ 44 billion deal were badly received by investors. There have already been complaints from influential major shareholders that the tech multi-billionaire – who also runs space and rocket company SpaceX – is neglecting Tesla too much.

In early January, Tesla stock hit a two-year low at $101.81. Since then things have been looking up again. But even with the clear price gains that are now emerging, the title is unlikely to even make up for its December losses.