Tesla’s Fourth Quarter Earnings Report: Record Deliveries, Labor Costs, and Union Pressure

Tesla, the leading electric vehicle (EV) manufacturer, is set to release its fourth-quarter earnings report for 2023 after the bell on Wednesday. The company, which has seen significant growth in the EV market, is expected to report earnings per share of 74 cents and revenue of $25.6 billion, according to estimates compiled by LSEG.

Despite facing competition from Chinese auto giant BYD, Tesla maintained its lead in sales of battery electric vehicles for the full year. However, the company is not without its challenges. Labor costs are rising domestically, and Tesla is facing union pressure in Sweden and across Scandinavia, as well as a wide-ranging array of litigation and ongoing regulatory probes in the U.S. and Europe.

Tesla’s fourth-quarter revenue is estimated to have increased by around 5% year over year. The company reported 484,507 deliveries in the fourth quarter and more than 1.8 million for the full year, a record for the company. Hefty price cuts helped Tesla achieve these numbers, but the company’s revenue growth may not be enough to satisfy investors.

One of the most pressing concerns for Tesla shareholders is the company’s plans for a software update that can turn existing Teslas into self-driving robotaxis without hardware changes. The update, which has been promised for some time, is seen as a key driver of future growth for the company. However, the regulatory and technical challenges of implementing such a system are significant.

Another concern for investors is Tesla’s labor costs. In order to make wages competitive with other U.S. automakers, Tesla recently rolled out pay increases for many of its hourly factory employees in the U.S. The company is also facing union pressure in Sweden and across Scandinavia, which could lead to further labor costs and potential disruptions to production.

Tesla’s CEO, Elon Musk, has been under pressure to deliver on his longstanding promise of a software update that can turn existing Teslas into self-driving robotaxis without hardware changes. Musk has also expressed a desire to have more voting control over the company, stating that he is uncomfortable growing Tesla to be a leader in AI & robotics without having around 25% of voting control. This demand has raised concerns among some investors, who see it as a potential distraction from the company’s core business.

Tesla shareholders have submitted questions for executives to answer via the platform Say Technologies ahead of the earnings call. They are asking when Tesla plans to debut its “next-generation” vehicle, a more affordable EV referred to by fans as the Model 2. Investors also want to know the number of orders Tesla has received for its recently released Cybertruck and when the company plans to increase production of its 4680 battery cells and electric Semi truck at its Nevada Gigafactory.

Musk’s recent demand for more voting control over Tesla has raised concerns among some investors, who see it as a potential distraction from the company’s core business. Ross Gerber, an investor and Tesla bull for years, has criticized Musk for “blackmailing” Tesla shareholders and for making unrealistic demands. Gerber argues that Musk already has significant control over the company and that the board is made up of his friends and family members.

Despite these challenges, Tesla remains a leader in the EV market and is expected to continue growing in the coming years. The company’s record deliveries and revenue growth, as well as its plans for a software update that can turn existing Teslas into self-driving robotaxis, make it an attractive investment for many. However, the regulatory and technical challenges of implementing such a system, as well as the potential labor costs and union pressure, could impact the company’s future growth prospects.

In conclusion, Tesla’s fourth-quarter earnings report is expected to provide insight into the company’s financial performance and growth prospects for the coming year. With record deliveries and revenue growth, as well as plans for a software update that can turn existing Teslas into self-driving robotaxis, Tesla remains a leader in the EV market. However, the regulatory and technical challenges of implementing such a system, as well as the potential labor costs and union pressure, could impact the company’s future growth prospects. Investors will be closely watching the earnings call for updates on these issues and for any new information on Tesla’s plans for the future.