WASHINGTON, Jan 31 (Reuters) – The White House on Tuesday expressed outrage on Tuesday at Exxon Mobil Corp’s record net profit in 2022 of $56 billion, a historical high not just for the company but for the entire Western oil industry.
Oil majors are expected to break their own annual records due to high prices and soaring demand, pushing their combined take to near $200 billion. The scale has brought renewed criticism of the oil industry and sparked calls for more countries to levy windfall profit taxes on the companies.
A White House statement said Exxon’s (XOM.N) profit margin was particularly galling as Americans paid record high prices at the pump. It criticized attempts by Republicans in the House of Representatives to push policies aimed at supporting the oil industry.
A logo of the Exxon Mobil Corp is seen at the Rio Oil and Gas Expo and Conference in Rio de Janeiro, Brazil September 24, 2018. REUTERS/Sergio Moraes
“The latest earnings reports make clear that oil companies have everything they need, including record profits and thousands of unused but approved permits, to increase production, but they’re instead choosing to plow those profits into padding the pockets of executives and shareholders while House Republicans manufacture excuse after excuse to shield them from any accountability,” the White House said.
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President Joe Biden has blasted oil companies and refiners for much of the last year for enjoying surging profits as gasoline prices soared. In June, he Biden wrote to executives of major oil refiners and complained they had cut back on production to pad profits, according to a copy of a letter seen by Reuters.
Exxon’s CFO Kathryn Mikells responded to growing criticism over the industry’s windfall profits and suggested the answer is not increased taxes.
“We look at the EU tax on the energy sector, and you know, it’s just unlawful and bad policy trying to tax something, when what you actually need is for it to increase,” Mikells said. “It has the opposite effect of what you’re trying to achieve.”
Reporting By Trevor Hunnicut and Steve Holland; additional reporting by Jarrett Renshaw and Sabrina Valle; Editing by Franklin Paul and David Gregorio
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BERLIN, Jan 30 (Reuters) – The German economy unexpectedly shrank in the fourth quarter, data showed on Monday, a sign that Europe’s largest economy may be entering a much-predicted recession, though likely a shallower one than originally feared.
Gross domestic product decreased 0.2% quarter on quarter in adjusted terms, the federal statistics office said. A Reuters poll of analysts had forecast the economy would stagnate.
In the previous quarter, the German economy grew by an upwardly revised 0.5% versus the previous three months.
A recession – commonly defined as two successive quarters of contraction – has become more likely, as many experts predict the economy will shrink in the first quarter of 2023 as well.
“The winter months are turning out to be difficult – although not quite as difficult as originally expected,” said VP Bank chief economist Thomas Gitzel.
“The severe crash of the German economy remains absent, but a slight recession is still on the cards.”
German Economy Minister Robert Habeck said last week in the government’s annual economic report that the economic crisis triggered by the Russian invasion of Ukraine was now manageable, though high energy prices and interest rate rises mean the government remains cautious.
The government has said the economic situation should improve from spring onwards, and last week revised up its GDP forecast for 2023 — predicting growth of 0.2%, up from an autumn forecast of a 0.4% decline.
As far as the European Central Bank goes, interest rate expectations are unlikely to be affected by Monday’s GDP figures as inflationary pressures remain high, said Helaba bank economist Ralf Umlauf.
The ECB has all but committed to raising its key rate by half a percentage point this week to 2.5% to curb inflation.
Monday’s figures showed falling private consumption was the primary reason for the decrease in fourth-quarter GDP.
“Consumers are not immune to an erosion of their purchasing power due to record high inflation,” said Commerzbank chief economist Joerg Kraemer.
Inflation, driven mainly by high energy prices, eased for a second month in a row in December, with EU-harmonized consumer prices rising 9.6% on the year.
However, analysts polled by Reuters predict annual EU-harmonized inflation will enter the double digits again in January with a slight rise, to 10.0%. The office will publish the preliminary inflation rate for January on Tuesday.
Reporting by Miranda Murray and Rene Wagner, editing by Rachel More and Christina Fincher
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Jan 25 (Reuters) – Tesla Inc’s (TSLA.O) aggressive price cuts have ignited demand for its electric vehicles, Chief Executive Elon Musk said on Wednesday, playing down concerns that a weak economy would throttle buyers’ interest.
The company slightly beat Wall Street targets for fourth-quarter revenue and profit earlier on Wednesday despite a sharp decline in vehicle profit margins, and it sought to reassure investors that it can cut costs to cope with recession and as competition intensifies in the year ahead.
Deep price cuts this month have positioned Tesla as the initiator of a price war, but its forecast of a 37% rise in car volume for the year, to 1.8 million vehicles, was down from 2022’s pace.
However, Musk, who has missed his own ambitious sales targets for Tesla in recent years, said 2023 deliveries could hit 2 million vehicles, absent external disruption.
Tesla’s sales prospects, as it confronts a weaker economy, are a key focus for investors. The company said it maintains a long-term target of a compounded 50% annual rise in sales.
Musk addressed the issue at the start of a call with investors and analysts.
“These price changes really make a difference for the average consumer,” he said, adding that vehicle orders were roughly double production in January, leading the automaker to make small price increases for the Model Y SUV.
He said he expected a “pretty difficult recession this year,” but demand for Tesla vehicles “will be good despite probably a contraction in the automotive market as a whole.”
Shares rose 5.3% in extended trading.
CYBERTRUCK
The company is relying on older products and Musk said its Cybertruck, its next new electric pickup truck, would not begin volume production until next year. Reuters in November reported that the highly anticipated model would not be produced in volume until late this year.
Tesla will detail plans for a “next-generation vehicle platform” at its investor day in March.
Tesla’s vehicles “are all in desperate need of updates beyond software,” said Jessica Caldwell, Edmunds’ executive director of insights. She said Tesla will largely depend on the cheaper unit as well as Model 3 and Model Y to bring EVs to the masses.
“It’s unlikely that the Cybertruck will attempt to achieve mass-market volumes like the Detroit competitors.”
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[1/5] A Tesla supercharging station is seen in the early morning sun, in Kettleman City, California, U.S., January 25, 2023. REUTERS/Mike Blake
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Analysts said Tesla’s goal is bullish given the macroeconomic uncertainties.
“I think that you’re going to see some severe demand destruction across consumer spending and I think cars are going to take a big hit,” Edward Moya, senior market analyst at OANDA, said.
Tesla said it does not expect meaningful near-term volume growth from China, since its Shanghai factory was running near full capacity, rebounding from production challenges last year.
“Even a small cooling of demand will have significant implications for the bottom line,” said Sophie Lund-Yates, an analyst at Hargreaves Lansdown.
Tesla said that its automotive gross margins, which dropped to a two-year low of 25.9% in the reported quarter, were pressured by the costs of ramping up battery production and new factories in Berlin and Texas, as well as higher raw material, commodity, logistics and warranty costs.
Tesla expected its automotive gross margin to remain above 20%.
Margins generally are expected to be under further pressure from its aggressive price cuts. Tesla, which had made a series of price increases since early 2021, reversed course and offered discounts in December in the United States, followed by price cuts of as much as 20% this month.
Analysts had said Tesla’s profitability gave it room to cut prices and pressure rivals. The company’s $9,000 in net profit per vehicle in the past quarter was more than seven times the comparable figure for Toyota Motor Corp (7203.T) in the third quarter. But it was down from almost $9,700 in the third quarter.
“In severe recessions, cash is king, big time,” Musk said, adding that Tesla is well positioned to cope with an economic downturn because of its $20 billion of cash.
The company’s stock posted its worst drop last year, hit by demand worries and Musk’s acquisition of Twitter, which fueled investor concerns he would be distracted from running Tesla.
Musk dismissed surveys that suggest his political comments on Twitter are damaging the Tesla brand. “I might not be popular” with some, he said, “but for the vast majority of people, my follow count speaks for itself.” He has 127 million followers.
Revenue was $24.32 billion for the three months ended Dec. 31, compared with analysts’ average estimate of $24.16 billion, according to IBES data from Refinitiv.
Tesla’s full-year earnings were bolstered by $1.78 billion in regulatory credits, up 21% from a year earlier.
Adjusted earnings per share of $1.19 topped the Wall Street analyst average of $1.13.
It ended the fourth quarter with 13 days’ worth of vehicles in inventory, more than four times higher than the start of 2022, and a record $12.8 billion in value.
Reporting by Hyunjoo Jin in San Francisco and Akash Sriram in Bengaluru, Additinoal reporting by Joe White and Ben Klayman in Detroit and Kevin Krolicki in Singapore
Writing by Peter Henderson
Editing by Sriraj Kalluvila, Matthew Lewis, Sam Holmes and David Goodman
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Jan 17 (Reuters) – Goldman Sachs Group Inc (GS.N) on Tuesday reported a bigger-than-expected 69% drop in fourth-quarter profit as it struggled with a slump in dealmaking, a drop in asset and wealth management revenue and booked losses at its consumer business.
Wall Street banks are making deep cuts to their workforce and streamlining their operations as dealmaking activity, their major source of revenue, stalls on worries over a weakening global economy and rising interest rates.
Goldman is also curbing its consumer banking ambitions as Chief Executive Officer David Solomon refocuses the bank’s resources on strengthening its core businesses such as investment banking and trading.
Solomon confirmed that the bank was cutting 6% of its headcount, or around 3,200 jobs, and was making changes to the consumer business to navigate an uncertain outlook for 2023.
“We tried to do too much too quickly,” he said about the consumer business such as its direct-to-consumer unit Marcus. “We didn’t execute perfectly on some so we’ve taken a hard look at those, and you make adjustments.”
Goldman reported a net loss of $660 million at its platform solutions unit, which houses transaction banking, credit card and financial technology businesses, as provisions for credit losses grew while the business was expanding.
Full-year net loss for the platform solutions business was $1.67 billion, the bank said, even though net revenue of $1.50 billion for 2022 was 135% above 2021.
Goldman on Tuesday confirmed that it is planning to stop making unsecured consumer loans after it moved Marcus into its asset and wealth management arm. The checking account launch for Marcus has also been postponed.
Goldman’s investment banking fees fell 48% in the latest quarter, while revenue from its asset and wealth management unit dropped 27% due to lower revenue from equity and debt investments.
Solomon said the investment banking outlook could be better in the “back half” of 2023, as people are softening their views on the economic outlook for this year.
Shares were down nearly 7% at $347.66 in midday trade.
[1/2] The logo for Goldman Sachs is seen on the trading floor at the New York Stock Exchange (NYSE) in New York City, New York, U.S., November 17, 2021. REUTERS/Andrew Kelly
Reuters Graphics Reuters Graphics
GROWING COSTS
Wall Street’s biggest banks have stockpiled more rainy-day funds to prepare for a possible recession, while showing caution about forecasting income growth in an uncertain economy and as higher rates increase competition for deposits.
Total operating expenses at Goldman rose 11% to $8.1 billion in the quarter. A source told Reuters last week that the bank would lay off 3,000 employees in an attempt to rein in costs.
Goldman Chief Financial Officer Denis Coleman said severance charges will be adjusted in 2023.
The bank reported a profit of $1.19 billion, or $3.32 per share, for the three months ended Dec. 31, missing the Street estimate of $5.48, according to Refinitiv IBES data.
“Widely expected to be awful, Goldman Sachs’ Q4 results were even more miserable than anticipated,” said Octavio Marenzi, CEO of consultancy Opimas.
“The real problem lies in the fact that operating expenses shot up 11% while revenues tumbled. This strongly suggests more cost cutting and layoffs are going to come,” he added.
Goldman’s trading business was a bright spot as it benefited from heightened market volatility, spurred by the Federal Reserve’s quantitative tightening.
Fixed income, currency and commodities trading revenue was up 44% while revenue from equities trading fell 5%.
Overall net revenue was down 16% at $10.6 billion.
Reporting by Niket Nishant and Noor Zainab Hussain in Bengaluru and Saeed Azhar in New York; Additional reporting by Bansari Mayur Kamdar; Editing by Anil D’Silva and Mark Porter
Our Standards: The Thomson Reuters Trust Principles.
U.S. consumers’ inflation expectations ease – survey
Tesla falls after price cuts on electric vehicles
Indexes: Dow up 0.3%, S&P 500 up 0.4%, Nasdaq up 0.7%
NEW YORK, Jan 13 (Reuters) – The S&P 500 and Nasdaq finished at their highest levels in a month on Friday, with shares of JPMorgan Chase and other banks rising following their quarterly results, which kicked off the earnings season.
All three major indexes also registered strong gains for the week, leaving the S&P 500 up 4.2% so far in 2023, and the Cboe Volatility index (.VIX) – Wall Street’s fear gauge – closed at a one-year low.
On Friday, financials (.SPSY) were among sectors that gave the S&P 500 the most support.
JPMorgan Chase & Co (JPM.N) and Bank of America Corp (BAC.N) beat quarterly earnings estimates, while Wells Fargo & Co (WFC.N) and Citigroup Inc (C.N) fell short of quarterly profit estimates.
But shares of all four firms rose, along with the S&P 500 banks index (.SPXBK), which ended up 1.6%. JPMorgan shares climbed 2.5%.
Still, Wall Street’s biggest banks stockpiled more rainy-day funds to prepare for a possible recession and reported weak investment banking results while showing caution about forecasting income growth. They said higher rates helped to boost profits.
Strategists said investors will be watching for further guidance from company executives in the coming weeks.
“This has shifted the focus back to earnings,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.
“Even though the earnings were basically OK, people are just kind of stepping back, and you’re going to see a wait-and-see attitude with stocks” as investors hear more from company executives.
Year-over-year earnings from S&P 500 companies are expected to have declined 2.2% for the quarter, according to Refinitiv data.
Also giving some support to the market Friday, the University of Michigan’s survey showed an improvement in U.S. consumer sentiment, with the one-year inflation outlook falling in January to the lowest level since the spring of 2021.
The Dow Jones Industrial Average (.DJI) rose 112.64 points, or 0.33%, to 34,302.61, the S&P 500 (.SPX) gained 15.92 points, or 0.40%, to 3,999.09 and the Nasdaq Composite (.IXIC) added 78.05 points, or 0.71%, to 11,079.16.
The S&P 500 closed at its highest level since Dec. 13, while the Nasdaq closed at its highest level since Dec. 14.
For the week, the S&P 500 gained 2.7% and the Dow rose 2%. The Nasdaq increased 4.8% in its biggest weekly percentage gain since Nov. 11.
The U.S. stock market will be closed Monday for the Martin Luther King Jr. Day holiday.
Thursday’s Consumer Price Index and other recent data have bolstered hopes that a sustained downward trend in inflation could give the Federal Reserve room to dial back on its interest rate hikes.
Money market participants now see a 91.6% chance the Fed will hike the benchmark rate by 25 basis points in February.
Among the day’s decliners, Tesla (TSLA.O) shares fell 0.9% after it slashed prices on its electric vehicles in the United States and Europe by as much as 20% after missing 2022 deliveries estimates.
In other earnings news, UnitedHealth Group Inc (UNH.N) shares rose after it beat Wall Street expectations for fourth-quarter profit but the stock ended down on the day.
Shares of Delta Air Lines Inc (DAL.N) dropped 3.5% as the company forecast first-quarter profit below expectations.
Volume on U.S. exchanges was 10.77 billion shares, compared with the 10.81 billion average for the full session over the last 20 trading days.
Advancing issues outnumbered declining ones on the NYSE by a 1.79-to-1 ratio; on Nasdaq, a 1.78-to-1 ratio favored advancers.
The S&P 500 posted 12 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 105 new highs and 8 new lows.
Additional reporting by Shubham Batra, Ankika Biswas and Amruta Khandekar in Bengaluru; Editing by Subhranshu Sahu, Shounak Dasgupta and Grant McCool
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Jan 5 (Reuters) – Bed Bath & Beyond Inc (BBBY.O) is preparing to seek bankruptcy protection in coming weeks, people familiar with the matter said, following poor sales and an inability to compete with large online and big-box retailers.
The U.S. home goods retailer is considering skipping debt payments due Feb. 1, one of the sources said, a typical move distressed companies on the verge of bankruptcy take to conserve cash.
Shares of the retailer, once a category killer in products like small appliances and bed sheets, ended down 30% on Thursday at $1.69 after the company said it expected to report a significant third-quarter loss and that there was substantial doubt about its ability to continue as a going concern.
The company said it was exploring a range of options to address its plunging sales that included declaring bankruptcy. The retailer said it has not made any final decisions on which course to take.
Bed Bath & Beyond had no immediate comment on any bankruptcy preparations beyond its disclosure on Thursday.
The company has interest payments on roughly $1.5 billion of bonds due Feb. 1, according to securities filings. The company is considering skipping the payout to conserve cash, which would likely trigger a 30-day grace period before the company officially defaults, the people said.
Troubled retailers often seek bankruptcy protection following the holiday season to take advantage of the cash cushion provided by recent sales. Should the company seek bankruptcy protection, it would likely seek financing from existing creditors to help it navigate a court restructuring, one of the people said.
The retailer’s fortunes soured after it pursued a strategy focused on its own private label goods. Management has since reversed course to bring in national brands shoppers recognized.
But on Thursday, signs emerged that this strategy too has failed to take off with the company reporting that it expects to post a loss of $385.5 million after sales plunged 33% for the quarter ending Nov. 26, due to lower customer traffic and reduced levels of inventory availability among other factors.
The company is scheduled to report its full third quarter results on Tuesday.
“The turnaround plan put in place last year is not working. … Put bluntly, the business is moving at rapid speed in the wrong direction with bankruptcy the most likely destination,” GlobalData analyst Neil Saunders said.
Bed Bath & Beyond has enlisted turnaround and consulting firm AlixPartners LLP to help advise on options for addressing its financial woes, people familiar with the matter said.
In addition to AlixPartners, the company is being advised by restructuring lawyers at Kirkland & Ellis LLP and investment bankers at Lazard Ltd (LAZ.N), one of the people said.
AlixPartners and Lazard declined to comment. Kirkland did not immediately respond to a request for comment. In a statement to Reuters late on Thursday, Bed Bath & Beyond said it was “working with strategic advisors to evaluate all paths to regain market share and enhance liquidity” but could not comment further on specific relationships.
The company became a meme stock last year when its shares soared more than 400%. Activist investor Ryan Cohen, the chairman of GameStop Corp (GME.N), took a stake in Bed Bath & Beyond, which he later sold, sending shares crashing.
Bed Bath & Beyond in its prior financial update in the fall said it had liquidity of $850 million but had burned through $325 million in the second quarter.
The company had also been asking bondholders to swap out their holdings for new debt to give it more breathing room to turn around its business but canceled the deal on Thursday after not getting much interest from investors, according to filings made with the U.S. Securities and Exchange Commission.
Bed Bath & Beyond had earlier considered selling its valuable buybuy Baby stores that sell goods for infants and toddlers but held off in the hopes it could later fetch a higher price, Reuters reported.
buybuy Baby is the “crown jewel” asset of the company and would likely generate the most interest from buyers in case the parent company decides to sell it as part of its restructuring efforts, Michael Baker, senior research analyst at DA Davidson said, without providing a valuation on the business.
The value of the chain helped the retailer ink a $375 million loan last year, the maximum amount it could borrow.
Reporting by Aishwarya Venugopal in Bengaluru and Siddharth Cavale in New York ; Editing by Shounak Dasgupta, Subhranshu Sahu, Mark Porter and Anna Driver
Our Standards: The Thomson Reuters Trust Principles.
Jessica DiNapoli
Thomson Reuters
New York-based reporter covering U.S. consumer products spanning from paper towels to packaged food, the companies that make them and how they’re responding to the economy. Previously reported on corporate boards and distressed companies.
Jan 4 (Reuters) – General Motors Co (GM.N) reclaimed the top spot in U.S. auto sales from rival Toyota Motor Corp (7203.T) in 2022 as it was able to better meet strong demand for cars and trucks despite industry-wide supply disruptions.
Shares of GM rose 2.7% in afternoon trade on Wednesday to $34.75, after the company posted a 2.5% rise in 2022 sales to 2,274,088 vehicles, higher than Toyota’s 2,108,458 units, in a closely watched race.
Inventory shortages stemming from surging material costs and a persistent chip crunch had hobbled production at many automakers, keeping car and truck prices elevated. Asian brands were hit hardest.
“Toyota is still among the tightest when it comes to inventory,” Cox Automotive senior economist Charlie Chesbrough said.
The Japanese automaker cut its full-year production target in November. Sales of its SUVs, a key segment, fell 8.6% in 2022, data on Wednesday showed.
However, Toyota executives said there were some positive signs emerging, and the rate of inventory buildup was slow but steady.
“We’re optimistic our inventory levels will continue to improve in the first quarter and for the remainder of the year,” said Andrew Gillel, senior vice president of automotive operations at Toyota.
Reuters Graphics
Other brands such as Hyundai Motor America, Kia Motors America, Mazda North American Operations and American Honda all posted a drop in sales on Wednesday.
Industry-wide, last year’s U.S. auto sales are forecast to be about 13.9 million units, down 8% from 2021 and 20% from the peak in 2016, according to industry consultant Cox Automotive.
Some analysts are also concerned that price hikes by automakers to blunt inflationary pressures and rising interest rates will take a toll on new vehicle sales in 2023.
Affordability is a “very real issue,” Toyota executive David Christ said. Nonetheless, the company expects demand to be robust this year.
Automakers will need to begin incentivising buyers, a trend that was paused during the pandemic, automotive marketplace TrueCar said.
Reporting by Aishwarya Nair, Nathan Gomes and Abhijith Ganapavaram in Bengaluru; Editing by Shilpi Majumdar and Devika Syamnath
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Stock top S&P 500 loser on first trading day of 2023
Selloff knocks off $50 billion from market cap
Tesla misses Q4 vehicle deliveries estimate
EV company is still the world’s most valuable automaker
Jan 3 (Reuters) – Tesla Inc (TSLA.O) shares kicked off 2023 with a thud, plunging more than 12% on Tuesday on growing worries about weakening demand and logistical problems that have hampered deliveries for the world’s most valuable automaker.
Once worth more than $1 trillion, Tesla lost more than 65% in market value in a tumultuous 2022 that saw it increasingly challenged by other automakers and face production issues stemming from COVID lockdowns in China.
Tuesday’s slide knocked off nearly $50 billion in market value, roughly equal to the valuation of rival Ford Motor Co (F.N), which last year sold three times as many cars as Tesla.
The sell-off came after Tesla missed market expectations for fourth-quarter deliveries despite shipping a record number of vehicles.
Reuters Graphics
“Tesla, as it has grown is now entering a phase of still solid but slower growth,” Morningstar analyst Seth Goldstein said. Being a major auto producer, it “is likely to feel more of an impact from an economic slowdown”, he added.
Several Wall Street analysts said they expected more pressure on the stock in the coming months from increasing competition and weaker global demand.
Global automakers have in the past few months battled a demand downturn in China, the world’s top auto market where the spread of COVID-19 has hit economic growth and consumer spending. Tesla is offering hefty discounts there and a subsidy for insurance costs.
At least four brokerages cut their price targets and earnings estimates on Tuesday, pointing to the deliveries miss and Tesla’s decision to offer more incentives to boost demand in China and the United States, the two largest global auto markets.
The company’s stock was the worst performer on the benchmark S&P 500 index (.SPX) on Tuesday as it fell as low as $104.64 a share – the lowest since August 2020. More than 220 million shares exchanged hands during regular trading hours.
The electric-vehicle maker’s performance in 2022 was among the worst on the S&P 500 index.
Members of media and guests surround the Tesla Model Y and Model 3 during Thailand Tesla’s official launch event in Bangkok, Thailand, December 7, 2022. REUTERS/Athit Perawongmetha
“You have so many things working against the stock. One obviously is Musk’s involvement in Twitter,” said Dennis Dick, market structure analyst and trader at Triple D Trading.
Tesla’s market value has declined by about $370 billion since Chief Executive Elon Musk closed the deal to buy social media firm Twitter.
Some of that drop has come from his share sale to fund the $44 billion deal, while the stock also declined due to worries among investors that Musk has been distracted by the social media company.
At a value of about $341 billion, Tesla is still the world’s most valuable automaker, even though its production is a fraction of rivals such as Toyota Motor Corp (7203.T).
Tesla shares biggest loser among Big Tech Tesla shares biggest loser among Big Tech since April
Tesla delivered 405,278 vehicles in the fourth quarter, short of analysts’ estimates of 431,117. For all of 2022, its deliveries rose by 40%, missing Musk’s 50% annual target.
The result “came at the cost of higher incentives, suggesting lower pricing and margin,” brokerage J.P.Morgan said in a note, lowering its price target by $25 to $125.
The median price target of 41 analysts on the stock was $250, more than double the current price, according to Refinitiv data. The lowest price is $85, from Roth Capital Partners.
The shortfall highlighted the logistics hurdles facing the company which is known for its end-of-quarter delivery rush. The gap between production and deliveries has widened to 34,000 vehicles as more cars got stuck in transit.
The automaker plans to run a reduced production schedule in January at its Shanghai plant, extending the lowered output it began in December into 2023, Reuters reported.
Meanwhile, California-based electric vehicle maker Rivian Automotive Inc (RIVN.O) narrowly missed its 25,000-unit production target for 2022.
Reuters Graphics
Reporting by Aditya Soni, Eva Mathews and Akash Sriram in Bengaluru; Additional reporting by Amruta Khandekar; Editing by Tomasz Janowski, Shounak Dasgupta and Arun Koyyur
Our Standards: The Thomson Reuters Trust Principles.
Tesla stock in 2022 had its worst year since going public
Jan 2 (Reuters) – Tesla Inc (TSLA.O) on Monday reported record production and deliveries for fourth-quarter electric vehicles, but it missed Wall Street estimates, burdened by logistics problems, slowing demand, rising interest rates and fears of recession.
The world’s most valuable automaker delivered 405,278 vehicles in the last three months of the year, compared with Wall Street expectations of 431,117 vehicles, according to Refinitiv data.
The company had delivered 308,600 vehicles in the same period a year earlier.
Tesla delivered 388,131 Model 3 compact sedans and Model Y sports utility vehicles (SUVs) compared with 17,147 Model X and Model S luxury cars.
In total, Tesla made 439,701 cars in the fourth quarter.
Reuters Graphics
As logistical bottlenecks persisted – an issue CEO Elon Musk had said in October he was working to resolve – Tesla’s fourth quarter deliveries fell about 34,000 vehicles short of production.
In the third quarter, the company deliveries were about 22,000 units fewer than production.
Delivering fewer cars than it makes has been rare for the automaker, which in previous quarters delivered more or similar numbers to the vehicles produced.
Among other headwinds for Tesla, analysts have cited demand weakness in the world’s top auto market China, as well as stiff competition from legacy automakers such as Ford Motor Co (F.N), General Motors Co (GM.N) and startups such as Rivian Automotive (RIVN.O) and Lucid Group (LCID.O).
Tesla plans to run a reduced production schedule in January at its Shanghai plant, extending the lowered output it began this month into next year, according to a Reuters report, based on a review of an internal schedule.
Tesla’s stock, which did not trade on Monday due to a New Year holiday, fell 65% in 2022, its worst year since going public in 2010. Analysts and retail shareholders feared demand issues stemming from an uncertain economy would dent the company’s target to grow deliveries by 50% annually.
“This was a disappointing delivery number and the bulls will not be happy,” said Wedbush Securities analyst Daniel Ives.
Tesla said in a separate statement that it plans to host its Investor Day on March 1 and livestream the event from its Gigafactory in Texas when it will discuss longterm plans for expansion and capital allocation.
The automaker also hinted at a “generation 3” platform to show its investors on Investor Day. Musk said in October that Tesla was working on a “next-generation vehicle” which will be cheaper and smaller than the Model 3 and Model Y cars.
(This story has been refiled to remove New York dateline)
Reporting by Akash Sriram and Baranjot Kaur in Bengaluru; Additional reporting by Akanksha Khushi; Editing by Sriraj Kalluvila, Matthew Lewis, Howard Goller and Barbara Lewis
Our Standards: The Thomson Reuters Trust Principles.
China overcame unprecedented difficulties in COVID battle: Xi
Still a time of struggle for controlling COVID: Xi
In Wuhan, surge in new cases shows signs of easing
Shanghai has 10 million infections, health official says
End of zero-COVID curbs prompts global concern
WUHAN/BEIJING, Dec 31 (Reuters) – Chinese President Xi Jinping called on Saturday for more effort and unity as the country enters a “new phase” in its approach to combating the pandemic, in his first comments to the public on COVID-19 since his government changed course three weeks ago and relaxed its rigorous policy of lockdowns and mass testing.
China’s abrupt switch earlier this month from the “zero-COVID” policy that it had maintained for nearly three years has led to infections sweeping across the country unchecked. It has also caused a further drop in economic activity and international concern, with Britain and France becoming the latest countries to impose curbs on travellers from China.
The switch by China followed unprecedented protests over the policy championed by Xi, marking the strongest show of public defiance in his decade-old presidency and coinciding with grim growth figures for the country’s $17 trillion economy.
In a televised speech to mark the New Year, Xi said China had overcome unprecedented difficulties and challenges in the battle against COVID, and that its policies were “optimised” when the situation and time so required.
“Since the outbreak of the epidemic … the majority of cadres and masses, especially medical personnel, grassroots workers braved hardships and courageously persevered,” Xi said.
“At present, the epidemic prevention and control is entering a new phase, it is still a time of struggle, everyone is persevering and working hard, and the dawn is ahead. Let’s work harder, persistence means victory, and unity means victory.”
New Year’s Eve prompted reflection online and by residents of Wuhan, the epicentre of the COVID outbreak nearly three years ago, about the zero-COVID policy and the impact of its reversal.
People in the central city of Wuhan expressed hope that normal life would return in 2023 despite a surge in cases since pandemic curbs were lifted.
Wuhan resident Chen Mei, 45, said she hoped her teenage daughter would see no further disruptions to her schooling.
“When she can’t go to the school and can only have classes online it’s definitely not an effective way of learning,” she said.
VIDEO REMOVED
Across the country, many people voiced similar hopes on social media, while others were critical.
Thousands of users on China’s Twitter-like Weibo criticised the removal of a video made by local outlet Netease News that collated real-life stories from 2022 that had captivated the Chinese public.
Many of the stories included in the video, which by Saturday could not be seen or shared on domestic social media platforms, highlighted the difficulties ordinary Chinese faced as a result of the previously strict COVID policy.
Weibo and Netease did not immediately reply to a request for comment.
One Weibo hashtag about the video garnered almost 4 million hits before it disappeared from platforms at about noon on Saturday. Social media users created new hashtags to keep the comments pouring in.
“What a perverse world, you can only sing the praises of the fake but you cannot show real life,” one user wrote, attaching a screenshot of a blank page that is displayed when searching for the hashtags.
The disappearance of the videos and hashtags, seen by many as an act of censorship, suggests the Chinese government still sees the narrative surrounding its handling of the disease as a politically sensitive issue.
HOSPITALS OVERWHELMED
The wave of new infections has overwhelmed hospitals and funeral homes across the country, with lines of hearses outside crematoriums fuelling public concern.
China, a country of 1.4 billion people, reported one new COVID death for Friday, the same as the day before – numbers that do not match the experience of other countries after they reopened.
UK-based health data firm Airfinity said on Thursday that about 9,000 people in China were probably dying each day from COVID. Cumulative deaths in China since Dec. 1 have likely reached 100,000, with infections totalling 18.6 million, it said.
Zhang Wenhong, director of the National Centre for Infectious Diseases, told the People’s Daily in an interview published on Saturday that Shanghai had reached a peak of infections on Dec. 22, saying there were currently about 10 million cases.
He said those numbers indicated that some 50,000 people in the city of 25 million would need to be hospitalized in the next few weeks.
At the central hospital of Wuhan, where former COVID whistleblower Li Wenliang worked and later died of the virus in early 2020, patient numbers were down on Saturday compared with the rush of the past few weeks, a worker outside the hospital’s fever clinic told Reuters.
“This wave is almost over,” said the worker, who was wearing a hazmat suit.
A pharmacist whose store is next to the hospital said most people in the city had now been infected and recovered.
“It is mainly old people who are getting sick with it now,” he said.
In the first indication of the toll on China’s giant manufacturing sector from the change in COVID policy, data on Saturday showed factory activity shrank for the third straight month in December and at the sharpest pace in nearly three years.
Reporting by Martin Quinn Pollard, Tingshu Wang and Xiaoyu Yin in Wuhan, Eduardo Baptista in Beijing; Writing by Sumeet Chatterjee
Editing by Helen Popper and Frances Kerry
Our Standards: The Thomson Reuters Trust Principles.
