Tesla has presented its business figures for the first quarter of 2023. It was eagerly awaited how the company’s worldwide price cuts would affect its balance sheet. The answer: Turnover falls slightly, but profit considerably.
The company reports $23.33 billion in revenues, of which $19.96 billion came from the automotive division. GAAP net income was $2.51 billion in the first quarter. Adjusted earnings per share reached 85 cents.
Compared to the end of 2022, revenue decreased by about $1 billion in the first three months of 2023, but increased by 24 per cent compared to Q1 2022. However, at the time, a Corona-related production stop in the important Giga Shanghai prevented better results. In the final quarter of 2022, Tesla then achieved its previous sales record of 24.32 billion dollars.
Profit was also lower compared to Q1 and Q4 2022. Tesla cited 19.3 per cent as its total GAAP gross margin, less than in the previous four quarters.
Operating profit fell to $2.7 billion in Q1 from a year earlier, resulting in an operating margin of 11.4 per cent. Before that, it was fairly constant at around 15 per cent. The outliers were 19.2 per cent in Q1/2022 and 17.2 per cent in Q3/2022. Now comes the expected margin collapse due to the multiple price reductions worldwide.
However, Tesla cites higher costs for raw materials, logistics and warranties on top of the reduced average vehicle price as reasons for the reduced profitability. In addition, the company says it is currently investing heavily in the ramp-up of 4680 cell production.
Tesla nevertheless comments relatively extensively on the price cuts: “As many carmakers are working through challenges with the unit economics of their EV programs, we aim to leverage our position as a cost leader,” it says in the annual report. The short-term pricing strategy takes into account a long-term view of profitability per vehicle, and according to Tesla, prices will continue to move up or down depending on a number of factors. And, “Although we implemented price reductions on many vehicle models across regions in the first quarter, our operating margins reduced at a manageable rate.” Later in the report, it says that Tesla continues to believe that operating margins will remain among the highest in the industry.
Record-breaking deliveries but lower sales revenues
Tesla repeats its goal of producing 1.8 million electric cars this year. The carmaker even uses the same wording as in the report for the fourth quarter of 2022: “We are planning to grow production as quickly as possible in alignment with the 50% CAGR target we began guiding to in early 2021. In some years we may grow faster and some we may grow slower, depending on a number of factors. For 2023, we expect to remain ahead of the long-term 50% CAGR with around 1.8 million cars for the year.”
