Tesla’s 1Q 2023 Report: Operating Margin Decreases, But Demand for Electric Vehicles Remains High
Tesla has released its financial results for the first quarter of 2023. Despite producing over 440,000 vehicles and increasing sales by 36% year on year, the company’s stock fell by 2% during the main session. The main reason for this was a decrease in the company’s operating margin, which was only 11.4%. This is below the forecast of 12.2% and the previous year when the margin was 19.2%.
Tesla continues to increase its production of electric vehicles, but the company’s operating margin is falling due to a decrease in the cost of vehicles. The falling stock prices indicate that investors are not satisfied with the results, which were slightly weaker than the Wall Street consensus forecast. However, Musk stated that a fully autonomous system will be ready this year, which could increase interest in Tesla’s products in the future.
Tesla: Table of key financial indicators for Q1 2023:
| Indicator | Value |
|---|---|
| Revenue | $23.32 billion |
| Gross margin | 19% |
| Operating profit | $2.7 billion |
| Operating margin | 11.4% |
| Adjusted EBITDA | $4.3 billion |
| Adjusted EPS | $0.85 |
Tesla: Table of production and sales data:
| Indicator | Value |
|---|---|
| Number of cars produced | 440.8 thousand |
| Number of cars sold | 422.8 thousand |
| Production growth | +44% YoY |
| Sales growth | +36% YoY |
| US market share | almost 4% |
| European market share | almost 2.5% |
Additional data:
- Post-market stock price: $169.63 (-6.1%)
- Revenue exceeded Wall Street expectations by $0.03 billion
- Operating margin was 0.8% lower than expected
- The margin reduction did not affect capital expenditure programs or production
- The decline in the cost of electric vehicles is impacting operating margin for the second consecutive quarter
- The company’s productivity continues to outperform the overall automotive industry
- Tesla plans to deliver about 1.8 million vehicles this year
- Musk stated that a fully autonomous system will be ready this year
- Production of the Cybertruck will begin this year.
However, Tesla claims that the margin reduction was manageable and that its profitability continues to significantly outperform the automotive industry as a whole. For example, General Motors’ operating margin was 6.6%, while Ford Motor’s was only 4%.
Furthermore, demand for electric vehicles remains high, reflected in Tesla’s production growth. The company plans to produce approximately 1.8 million automobiles this year, in line with its previous average annual growth forecast of 50% over the next several years. Additionally, Elon Musk announced on a conference call that a fully autonomous system will be ready this year.
Tesla also plans to start production on the Cybertruck this year. According to the report, the company’s market share in the US automobile market has risen to almost 4%, and to nearly 2.5% in Europe. Revenue was $23.3 billion, up 24% YoY, but net profit decreased to $2.9 billion due to price reductions on electric vehicles six times this year.
Despite the decrease in operating margin, Tesla continues to maintain its leadership in the electric vehicle market. The company plans to increase production volumes and even launch a fully autonomous system this year, which could provide it with even greater advantages over competitors.
