Tesla’s profit from sales of electric cars slumped in the last three months of last year because of price cuts intended to thwart increasingly intense competition, the company said on Wednesday as it warned of a tough year ahead.
Profit in the fourth quarter nearly doubled to $7.9 billion, up from $3.7 billion a year earlier. But $5.9 billion of that profit came from a tax benefit. Without that one-time accounting effect, profit would have fallen.
Tesla has slashed prices for the two cars that make up the bulk of its sales — the Model 3 sedan and the Model Y sport utility vehicle — as automakers like BYD, in China, and General Motors, Hyundai, Ford Motor and Volkswagen, in the United States and Europe, have begun selling more electric vehicles.
The price cuts have helped Tesla sell more cars and forced other carmakers to respond, helping to make electric vehicles more affordable. But the cuts have weighed on Tesla’s profit. In 2022, Tesla was one of the most profitable carmakers in the world, but its margins from vehicle sales have fallen by almost one-third in the last year and are now comparable to those of other large rivals.
Because of the price cuts, sales revenue from cars last quarter rose just 1 percent from a year earlier, to $21.6 billion — even though Tesla sold 1.8 million cars in 2023, a 35 percent increase from 2022. Tesla made up some of the difference by reducing manufacturing costs.
Tesla shares slumped about 6 percent in after-hours trading after the company said it expected sales growth to be “notably slower” in 2024 as it developed a budget-priced vehicle. Elon Musk, Tesla’s chief executive, said during a conference call Wednesday that the vehicle, whose design is still a secret, might be available by late 2025.