Electric Vehicle automaker Tesla has reported an increase in revenue in the first quarter despite a series of price cuts.
Tesla’s first-quarter earnings call which was live-streamed on Twitter yesterday revealed that the company made $23.33 billion in revenue, slightly higher than the $23.21 billion Wall Street estimated. The company’s $0.85 earnings per share were however in line with analyst predictions.
The automotive company reports $2.5 billion in profit for the first quarter, slightly below the $2.6 billion expected and represented a 24% decline when compared to the same period of 2022. GAAP earnings came in at 73 cents, down 23% from the year-ago quarter.
Automotive revenue, Tesla’s core segment, reached $19.95 billion in the quarter, up 18% from last year. Total revenue was up 24%.
Revenue from automotive regulatory credits during the first three months of 2023 amounted to $521 million, down from $679 million in the same quarter last year. Also, Tesla’s energy revenue soared to $1.53 billion, up 148% compared to the same period last year.
Investors King understands that Tesla’s decline in profit was largely expected due to a series of price cuts on some of its vehicle models, with the latest price cuts on Tuesday this week, after it slashed the prices of some of its vehicle models in the U.S. for the sixth time.
On the first quarter call, Tesla said via a statement,
“In this current macroeconomic environment, we see this year as a unique opportunity for Tesla. 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. We are focused on rapidly growing production, investments in autonomy and vehicle software, and remaining on track with our growth investments.
“Although we implemented price reductions on many vehicle models across regions in the first quarter, our operating margins reduced at a manageable rate. We expect ongoing cost reduction of our vehicles, including improved production efficiency at our newest factories and lower logistics costs, and remain focused on operating leverage as we scale”.
Also, speaking at its first quarter (Q1) earnings call is the company’s CEO Elon Musk who during a question and answer section with analysts disclosed that he expects 12 months of “stormy weather” in the economy which will impact consumer spending. He stated that whenever there is uncertainty in the economy, people are likely to postpone big new purchases like a new car.
Musk, however, stated that Tesla has taken a view that pushing for higher volumes and a large fleet is the right choice, versus a lower volume and higher margin while noting that over time Tesla will be able to generate significant profit through autonomy.
In 2023, Tesla expects to produce 1.8 million vehicles, Musk reiterated, or possibly an upside volume of 2 million vehicles this year.
