Tesla becomes the most profitable car company in 2022 as traditional giants accelerate electrification

Recently, the U.S. auto companies have released their 2022 earnings reports.

Specifically, Tesla earned $12.583 billion in 2022 net profit attributable to the mother; General Motors net profit of about $9.9 billion, basically the same as last year; Ford's 2022 net profit of about -$1.98 billion, while its net profit in 2021 was about $17.937 billion.

Right now, Tesla is the most profitable U.S. auto company with its electric car business, and Detroit's traditional auto giants are also actively betting on the electric car business. General Motors has announced a $35 billion push for electrification, while Ford has announced plans to invest more than $50 billion from 2022 to 2026 to fully utilize the research and development of models and power battery technology in the field of electrification.

In the face of the transformation of the two auto giants, Tesla, which occupies the majority of the U.S. electric vehicle market, chose to "cut prices" to stabilize its position, while GM refused to "take up the fight", but Ford chose to follow up with a price cut. Right now, the "price war" in the U.S. electric car market is heating up.

Now, electric vehicles become the new growth point of the U.S. auto market. According to Wards Intelligence data, in 2022, total U.S. car sales of about 13.7 million units, the lowest point since 2011. In contrast, U.S. electric vehicle sales will be about 807,000 units in 2022, accounting for 5.8 percent of all vehicle sales, up from 3.2 percent a year earlier, according to the Wall Street Journal. With the aggressive layout of GM and Ford, there will be more to see in the U.S. electric vehicle market this year.

Tesla's profit far exceeds GM and Ford

For Ford, its 2022 earnings report is less than expected. According to Ford's earnings data released on Feb. 2, its revenue for the full year 2022 was about $158.1 billion, up 16 percent year-over-year. Net loss was about $1.98 billion. Ford said sales in the fourth quarter of 2022 were 100,000 units lower than expected, leading to a significant drop in the company's profit. Ford blamed chip shortages and other supply chain issues and "instability" in production, which led to higher costs, as well as lower-than-expected production.

Photo credit: MOTOR TREND

Ford CEO Jim Farley said on the earnings call, "There are deep-rooted problems in our industrial system that shame me and my team."

In contrast to Ford is Detroit's other veteran car company, General Motors.

A few days ago, GM's latest earnings data showed that in 2022, GM's net income of about $156.7 billion, net profit of about $9.9 billion; adjusted EBITDA of $14.5 billion, adjusted EBIT margin of 9.2%, adjusted cash flow from the automotive business of $10 billion. Growth in the North American vehicle sales business was the main reason for GM's revenue surge. in the fourth quarter of 2022, GM's deliveries in the U.S. increased 41.4 percent year-over-year.

"Last year's strong financial performance set us apart from the competition." GM Chairman and Chief Executive Officer Mary Bolla said in a letter to shareholders. Looking ahead to 2023, GM's net income is expected to be in the range of $8.7 billion to $10.1 billion, adjusted EBITDA is expected to be between $10.5 billion and $12.5 billion, and cash flow from automotive operations is expected to be between $5 billion and $7 billion.

In contrast, Tesla's report card is more dazzling.

Tesla's 2022 earnings data show that the company's total revenue for the reporting period was approximately $81.46 billion, up 51.4 percent year-over-year. Among them, the Chinese market achieved revenue of about $18.145 billion, accounting for 22.27%; the U.S. market achieved revenue of about $40.553 billion, accounting for 49.78%, still the largest market for Tesla. In the fourth quarter of 2022, Tesla achieved the highest single-quarter operating income, highest operating profit and highest net profit in its history, while also setting a new annual record of 1.31 million Tesla electric vehicle deliveries.

It is worth noting that Tesla's 2022 net income attributable to the mother of about $12.583 billion, an increase of 127.8% year-on-year, surpassing General Motors by about $2.7 billion and more than Ford by $14.583 billion. For its part, Tesla said the company's team is also accelerating cost control planning and tapping into higher production efficiency, while continuing to focus on implementing the next phase of its plan.

Electric car "price war" heating up in the U.S.

Electrification is the new battleground for U.S. auto competition. And GM is taking aim at Tesla, saying it will surpass it as the best-selling electric car maker in the U.S. by 2025.

To this end, GM plans to reach 1 million electric vehicles production capacity in North America by 2025 and launch over 20 new energy vehicles by 2025 based on the Otenergy platform. At present, the GMC pure electric Hummer, BrightDrop Zevo 600 pure electric logistics truck and Cadillac Reigel built on the new Otenergy platform have opened for delivery last year, and the trial vehicle of Buick's first Otenergy product, Electra E5, also rolled off the line at the end of last year.

Ford has also set up a "military order" that by 2030, half of Ford's global sales will be electric vehicles.

Right now, this old car company is also accelerating the turnaround. Back in March 2022, Ford announced a major restructuring plan to separate its electric vehicle and internal combustion engine businesses. In the context of the business restructuring, Ford's layoff plan has long been underway. in April 2022, Ford cut 580 salaried and agency positions in the U.S.; in August 2022, Ford announced the elimination of 3,000 salaried and contract jobs; on January 24, 2023, the German IG Metall union said that Ford plans to lay off about 3,200 employees in Europe.

Tesla started a global "price war" at the beginning of the new year under the external pressure of the rapid transformation of the two American car giants and the internal pressure of overcapacity. on January 6, Tesla Model 3 and Model Y saw price adjustments in the Chinese market, with a maximum price reduction of 48,000 yuan. Among them, the Model 3 starting price dropped to 229,900 yuan, becoming the lowest-priced Tesla model in history.

With that, Ford became the first car company in the U.S. market to follow Tesla's price cut, which lowered the price of its electric car Ford Electric Horse Mustang Mach-E by an average of about 5.85%, with the biggest drop being the long-range version, GT Extended Range, which was reduced by $5,900.

In the face of price cuts from two major competitors, Mary Bolla said GM has no current plans to reduce prices. "Our current products and the prices that go with them have been of interest to a wide range of customers. The products are performing well in the market and our products deserve this kind of pricing." Mary Bolla said, in fact, more focused on achieving profitability in electric vehicles than price cuts on the part of GM, which plans the electric vehicle business to be profitable in North America by 2025.

Right now, Tesla still holds a major share of the U.S. electric vehicle market, according to Motor Intelligence estimates, Tesla sales last year accounted for 65% of total U.S. market sales, but has declined from 72% in 2021. In the rapid transformation of local car companies such as General Motors and Ford, the U.S. electric vehicle market competition will be more intense this year.