Tesla posted record net income in the fourth quarter of last year and the company has predicted that additional software-related profits will keep its margins higher than any other carmaker.
The maker of electric vehicles and solar panels, based in Austin, Texas, said it made 3.69 billion dollars (£2.97 billion) from October through to December, or an adjusted 1.19 dollars per share.
That beat estimates of 1.13 dollars that had been reduced by analysts, according to FactSet.
The company’s profit was 59% more than the same period a year ago.
Revenue for the quarter was 24.32 billion dollars (£19.61 billion), which fell short of the 24.67 billion dollars (£19.89 billion) that analysts expected.
On January 13, the company cut prices in the US and China, its two biggest markets, by up to 20% on some models, leading many analysts to believe that demand had fallen due to high prices and rising interest rates.
Tesla said in its investor letter on Wednesday that it would produce about 1.8 million vehicles this year, ahead of a predicted 50% annual growth rate.
But the outlook section of the letter did not give an estimate of deliveries for the year.
Previously Tesla has said its deliveries would grow at a 50% annual rate most years.
Morgan Stanley analyst Adam Jonas wrote in a note to investors early on Wednesday that demand is a problem for the company.
“In our view, the price cuts are indeed a response to slowing incremental demand relative to incremental supply,” he wrote.
Tesla also said it has rolled out its Full Self-Driving software to about 400,000 users, and that it recognised 324 million dollars (£261.2 million) in revenue from Full Self-Driving software during the quarter.
Despite its name, Full Self-Driving cannot drive itself, and Tesla warns drivers that they must be ready to intervene at any time.
The company said it knows there are questions about macroeconomics in the face of rising interest rates.
“In the near term we are accelerating our cost reduction roadmap and driving towards higher production rates, while staying focused on executing against the next phase of our roadmap,” the letter said.
Shares of Tesla were up slightly on Wednesday, closing at 144.43 dollars. They rose another less than 1% in extended trading following the earnings report.
The company’s stock tumbled 65% last year on fears that Elon Musk was distracted by his 44 billion dollar (£35.48 billion) acquisition of Twitter. But so far this year they are up about 35%.
Price cuts that began on January 13 fuelled concerns on Wall Street that demand for Teslas was falling as intense competition arrives from start-ups and legacy carmakers.