Elon Musk Says Tesla Price Cuts Triggered Wave Of Demand, 2023 Sales Could Hit 2M Mark

Tesla Inc TSLA CEO Elon Musk said Wednesday, on the company’s fourth-quarter earnings call, that 2023 sales could hit the 2 million vehicle target as demand got a boost from price cuts.

What happened: “We think demand will be good despite probably a contraction in the automotive market as a whole. So, basically, price really matters," Musk said on the call.

He said demand was nearly double the production in January, and sales this year could hit 2 million if there was no external disruption.

“We're not committing to that, but I'm just saying that's the potential. I think there would be demand for that, too,” said Musk.

See Also: Everything You Need To Know About Tesla (TSLA) Shares

Why It Matters: Musk said Telsa is making some “small price increases” on strong demand.

At the beginning of 2023, Tesla cut U.S. prices of its vehicles by up to 19.7%, which allowed both the Model 3 and Model Y to qualify for the new $7,500 EV tax credit. Since then, Model Y's price has been increased by $500.

Tesla CFO Zachary Kirkhorn said automotive profit margins, which fell to a two-year low of 25.9% in the fourth quarter, would remain above 20%. He said average prices would stay at $47,000 across models.

Tesla's fourth-quarter revenue of $24.32 billion beat the market estimate of $24.16 billion. Earnings per share of $1.19 also beat a Wall Street estimate of $1.13.

Vehicle production increased by 44% to 439,701 units, while deliveries rose by 31% to 405,278 vehicles from a year earlier.

Price Action: Tesla shares spiked 5.5% in extended trading to $152.39 after closing 0.4% higher on Wednesday, according to Benzinga Pro data. 

Read Next: Trading Strategies for Tesla Stock Before And After Q4 Earnings