Tesla profit slumps despite record car sales

20 Apr 2023

Image: © Aleksei Potov/Stock.adobe.com

The EV maker reported a 36pc boost in car sales and a revenue increase this year, but its net income has fallen by 24pc this quarter.

Tesla’s gross profit and income has taken a hit this quarter, despite the company’s efforts to boost its car sales and diversify its revenue.

The company’s revenue for the first quarter of 2023 reached $23.32bn, an increase of 24pc compared to the same period last year. Revenue went up across all sectors, with a 148pc increase for Tesla’s energy generation and storage revenue.

Despite this, the EV maker’s gross profit fell by 17pc to $4.51bn, while its net income dropped by 24pc, standing at $2.51bn. Operating expenses remained steady and fell by only 1pc, while Tesla’s income from operations dropped by 26pc to $2.66bn.

Commenting on the results, Tesla said it aims to leverage its positions as a “cost leader” this year, while other carmakers “are working through challenges with the unit economics of their EV programs”.

“Our near-term pricing strategy considers a long-term view on per vehicle profitability given the potential lifetime value of a Tesla vehicle through autonomy, supercharging, connectivity and service,” the company said.

“We expect that our product pricing will continue to evolve, upwards or downwards, depending on a number of factors.”

Earlier this month, Tesla reported a new record in car sales this year, which was attributed to recent price cuts made by the EV maker. The company’s car sales jumped by 36pc compared to the same period in 2022, though it still fell short of analysts’ expectations.

“While we continue to execute on innovations to reduce the cost of manufacturing and operations, over time, we expect our hardware-related profits to be accompanied with an acceleration of software-related profits,” Tesla said in its earnings report.

“We continue to believe that our operating margin will remain among the highest in the industry.”

Meanwhile, the Irish arm of Tesla saw its pre-tax profits surge by 75pc last year, rising to €985,786, RTÉ reports.

Tesla suffered a dramatic drop in its stock price last year due to changing economic headwinds and Elon Musk’s takeover of Twitter.

The electric vehicle maker has faced growing competition, as legacy automakers such as Ford and General Motors have pushed into the growing market.

Tesla lost its top spot as world’s leading manufacturer of battery-powered electric vehicles last July, getting beaten in production by Chinese rival BYD.

The company is also facing controversy from a recent report, which claims Tesla staff shares videos and images recorded by customers’ in-car cameras, according to former employees speaking to Reuters.

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Leigh Mc Gowran is a journalist with Silicon Republic