be warned

Texas-based EV giant foresees profit crunch amid price drops, slowing growth

Tesla warned that sales growth this year may be “notably lower” than the 2023 growth rate, as it works to launch a more affordable next-generation vehicle at a factory near Austin. Photo courtesy of Tesla

Shares of Tesla tumbled at the opening bell Thursday as the electric vehicle, solar panel and battery maker warned investors of slower sales growth this year after posting fourth-quarter results that were weaker than most had expected.

In a letter to shareholders released Wednesday, Tesla warned that sales growth this year may be “notably lower” than the 2023 growth rate, as it works to launch a more affordable next-generation vehicle at a factory near Austin.

Tesla, the letter said, is between two big growth waves, one from global expansion of the Models 3 and Y, and a second coming from the new vehicle.

The company, which is headed by billionaire Elon Musk, reported a fourth-quarter adjusted profit of 71 cents per share on revenue of $25.17 billion. Analysts polled by FactSet predicted a profit of 73 cents per share. Revenue was expected to be $25.64 billion.

Profits were off because Tesla lowered prices worldwide through the year in an effort to boost its sales and market share.

Shares slid more than 9 percent in Thursday morning trading.

Wedbush's Dan Ives said in a client note that Tesla's conference call on Wednesday to go over its financial results left many frustrated.

“Consistent with last quarter’s call, investors wanted to get their arms around the falling margins and constant, never ending price cuts seen globally, but instead, we heard from a much more cautious Musk who focused on production, next-gen vehicle timelines, and FSD/AI investments where much of the larger Tesla story was talked about instead of concrete guidance,” Ives wrote.

Still, the analyst remains optimistic on Tesla, believing that electric vehicle adoption to a broader mass market is near. However, Ives concedes there are still challenges to contend with.

“This is a pivotal period for Musk to get Tesla through that will help shape (or haunt) its EV future," he said.

Jeffrey Osborne of TD Cowen said that in the short term, it will be hard for EV competitors to catch up to Tesla as the company focuses on electrical efficiency and investing in battery technology. However, the analyst said there is “a great deal” of production-related risk in coming quarters that could possibly pressure margins and the stock as Tesla ramps up new plants in Germany and Texas and new vehicles.

A year ago, Tesla announced its plans to expand its Texas facility.

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A View From HETI

Michael Wortley, Joulent's new CFO, and Corey Grindal, the company's new COO. Photos courtesy Joulent

Houston-based energy infrastructure startup Joulent has brought aboard a new chief financial officer and new chief operating officer—both former executives at Houston-based Cheniere Energy.

The C-suite moves come three months after Joulent raised $1.75 billion from National Grid Ventures.

Michael Wortley joins Joulent as co-president and CFO. Wortley most recently was executive vice president and CFO at Cheniere, an LNG producer and exporter.

In conjunction with Wortley’s hiring, Brian Boland, who was Joulent’s interim CFO, has been named executive vice president, chief investment officer, and head of strategy.

Corey Grindal comes to Joulent as co-president and COO. Grindal most recently was executive vice president and COO at Cheniere.

“As Joulent evolves to meet the growing demand for power infrastructure, our expanded leadership team will help ensure we continue delivering the execution certainty our customers, partners, and investors expect,” Chris James, Joulent’s founder and CEO, said in a press release.

“Corey and Michael are accomplished operators with exceptional records of building and leading world-class energy infrastructure businesses, where they have embedded a culture defined by operational excellence and disciplined execution,” James added.

Joulet builds dedicated power-generating facilities that feed directly into data centers and other power-dependent facilities. This eliminates the need for companies to draw power from grids.

“With an initial multi-gigawatt development portfolio and strategic partnerships across the energy, infrastructure, and data center ecosystem, Joulent is helping remove power constraints to enable the next chapter of American innovation and U.S. reindustrialization,” the company says.

The $1.75 billion minority investment from National Grid Ventures complements Joulent’s existing partnerships.

Joulent, founded in 2023, emerged from stealth mode this summer. The company was founded by investment firm Engine No. 1.

Joulent’s first project, the Project Kilby natural gas facility in West Texas, will be co-located with a Microsoft data center. It’ll deliver about 2.67 gigawatts of power under a 20-year deal between Microsoft and Energy Forge One, a 50/50 joint venture between Chevron and Joulent.

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