What To Expect From Tesla's Q4 Earnings?

Tesla (NASDAQ:TSLA) is expected to publish its Q4 2022 earnings on January 25, reporting on a quarter which saw the company contend with supply chain and demand-related headwinds. We expect Teslas revenues to come in at $24.9 billion, roughly in line with estimates. This would mark year-over-year growth of about 40% and a sequential rise of 16%. Earnings are likely to come in at about $1.13 per share, up from $0.85 in the year-ago quarter. See our interactive dashboard analysis on Tesla Earnings Preview for more details on how Teslas revenues and earnings are likely to trend for the quarter. So what are some of the trends that are likely to drive Teslas results?

Tesla said that it had delivered 405,000 vehicles over the quarter that ended in December, marking a growth of about 31% year-over-year. While this represents healthy growth, it falls short of the companys long-term target of expanding deliveries by at least 50% annually over a multi-year period. There are a couple of factors that have weighed Tesla down. The Covid-19 outbreaks in China have disrupted production at the companys Shanghai factory. Its also likely that the demand picture is also weakening, as Tesla resorted to relatively steep price cuts and promotions in markets including the U.S. and China. Teslas automotive gross margins have already been trending lower, falling from around 30.5% in Q3 2021 to 27.9% in Q3 2022. We expect this trend to continue over Q4 2022 as well, considering the price cuts, which stood at as much as 10% of the Model 3 and Ys sticker price. Moreover, Teslas production ramp at new plants in Germany and Texas is also likely to have proven a drag on margins.