Tesla reported a lower-than-expected gross margin for the first quarter of 2023 as a series of aggressive price cuts aimed at spurring demand in a sagging economy and fending off rising competition took their toll. As a result, the company's total gross margin stood at 19.3%, compared to analysts' expectations of 22.4%, marking the lowest level since Q4 2020.
Multiple price cuts in the U.S., China, and other markets impact profitability.
Tesla has slashed prices several times in the United States, China, and other markets since late 2022 to drive volume growth amid an economic recession. Tesla has implemented six price cuts in the U.S. alone this year, which has affected its automotive gross margin. Price cuts have also been extended to Singapore, Israel, and Europe.
Despite the challenges, Tesla remains optimistic about its long-term prospects. The company reiterated its target of delivering around 1.8 million vehicles in 2023 and highlighted its ongoing investments in battery factories and efforts to normalize raw material and logistics costs. Tesla also expects its operating margin to remain the highest among volume original equipment manufacturers.
Tesla's automotive gross margins, a key figure for investors and analysts, dropped significantly. For Q1 2023, analysts had expected the company to report an auto gross margin of 23.2%, down from a record 32.9% a year earlier and the lowest since Q4 2019.
Company Focused on Long-Term Growth
Tesla's Q1 revenue reached $23.33 billion, slightly missing the consensus estimate of $23.35 billion. Adjusted net income stood at $2.9 billion, lower than the estimated $3.03 billion and considerably less than the previous quarter's figures and those from the same period last year. This trend indicates potential margin compression for the company.
Despite the challenges, Tesla remains committed to increasing production and maintaining a 50% long-term delivery growth rate. The company also confirmed that Cybertruck production is on track to begin later this year at its Gigafactory in Austin, Texas.
With numerous market price cuts and an uncertain economic landscape, Tesla's strategy to boost demand and grow market share comes under scrutiny. As the EV market grows more competitive, Tesla's ability to balance profitability and expansion will be crucial to maintaining its industry-leading position.
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This week we take a look at Tesla's upcoming update, 2023.20, Tesla's improvements to Autowipers and its latest app update
Join us as we take a look back at this week's top Tesla stories. From an early look at the features included in Tesla's upcoming 2023.20 software update, to Tesla's latest app update, we dive into the top stories of the week.
An Early Look at Tesla's 2023.20 Update and Its Features
Tesla is introducing the ability to track your tire mileage in update 2023.20
Preparations are underway for Tesla's next software update, version 2023.20. Although currently in testing, this update has been drawing attention since it was first noticed last week. Considering Tesla's 2023.12 update brought numerous new features, it appears this next may be smaller. However, we now have our first look at some of the features included in Tesla's 2023.20 update.
A noteworthy improvement under the upcoming update pertains to tire service tracking. Post-update, vehicle owners can track how many miles have been driven since their last tire service.
Tesla Updates App to v4.21.5, Adds New Loot Box, Referral Rewards and References New Features
Tesla has updated its app to 4.21.5
Not a Tesla App
This week Tesla updated their iPhone app to version 4.21.5. The updated features include a new Loot Box design and a notice to Canadians using their Superchargers. Tesla also hints at several upcoming features including Boombom v2.
Tesla's Model Y With Hardware 4.0 Doesn't Include Radar: We Take a Look at Why
Tesla's Model Y with HW4 is coming without radar
As Tesla continues to redefine the automotive industry, insiders have revealed that the company's upcoming Hardware 4.0 (HW4) will not include the radar module in its Model Y vehicles, at least not initially. This marks a shift in the company's approach towards autonomous driving, relying more heavily on vision-based systems. This strategic decision builds on the recent introduction of HW4 in the luxury Model S and Model X models.
Previously, the integration of HD radar in the Model S and Model X indicated an evolution in the company's Full Self-Driving (FSD) hardware.
Tesla Reduces FSD Beta Suspension Duration With FSD Beta 11.4.2
Tesla has reduced the FSD suspension to one week with FSD Beta 11.4.2
Tesla is again modifying the Full Self Driving (FSD) Beta suspension policy. Initially, the system, which is based on a strike policy, suspended users until Tesla reset strikes globally, which ranged from about every three to nine months. The driver has up to three strikes for vehicles without a cabin camera and five for those equipped with them.
More recently Tesla changed their policy to reset FSD suspensions on an individual basis after "approximately two weeks," according to Tesla. But with the introduction of FSD Beta 11.4.2, Tesla has now reduced the suspension interval from two weeks to approximately one week.
Tesla and Ford Forge New Partnership: Ford To Incorporate Tesla Charge Port (NACS) in Future EVs
Ford will add a Tesla (NACS) port to its future EVs
In a move that attests to Elon Musk's words on fostering industry collaboration over competition, Tesla and Ford have announced a partnership to enable the latter's electric vehicles access to Tesla’s extensive Supercharger network.
Contrary to earlier speculations that Tesla's move to open its proprietary charging connector might be a futile attempt at standardization, Ford has embraced the North American Charging Standard (NACS) - Tesla's charging system. With this, Tesla’s charging plug design, known for some advantages over the current CCS standard, might start gaining traction across the North American EV sector.
Tesla Upgrades Autowipers to v4, Musk Apologizes for Poor Performance
FSD Beta 11.4.2 introduces Autowipers v4
For Tesla owners, the auto wiper system has been a contentious feature. Loved by some for its attempt at autonomous convenience yet criticized by others for its hit-or-miss performance, the system has often had trouble with extreme light conditions or misty weather. Now, Tesla has introduced v4 of their autowipers system that aims to correct past issues and enhance the user experience.
Tesla to Deliver Cars at 50% Charge, Offers 150km Free Supercharging
Tesla will now give owners a 150km Supercharger credit
Tesla has recently come up with a new way of doing things when it comes to delivering cars. The company claims this change has been made to align with some new rules in the industry. In the past, Tesla always delivered cars with a full charge. Now, they are to be delivered with only half charge.
When electric vehicles are being transported from one place to another, having them fully charged can pose a risk. Keeping the state of charge (SOC) at 50% during shipment reduces the chances of battery fires. This practice is not new. Other battery-operated devices, like e-bikes, are also shipped at a lower SOC for the same safety reasons.
Tesla Model 3 Refresh Reveal Rumors Coincide with Elon Musk's China Visit
Is Tesla getting ready to unveil the refreshed Model 3?
Tesla CEO Elon Musk's recent visit to China, his first in three years, has set the stage for widespread conjecture around the unveiling of the revamped Tesla Model 3. Dubbed Project Highland, this model refresh has been a topic of discussion for some time. Industry insiders believe Musk's significant stop at the Shanghai Gigafactory might be strategically timed to coincide with a potential sneak peek of the new Model 3 design.
Tesla Screen Size Comparison for All Tesla Models, Including Size, Resolution and Aspect Ratio
A good view of all the displays available in a Model S
Tesla is a pioneer in the automotive industry, and one of the most defining features of its vehicles is the use of large touchscreens. These screens are a central hub for most vehicle functions, including music, vehicle settings, navigation, and more. Tesla's commitment to a minimalist and user-friendly design is evident through integrating these screens, which have become iconic in electric vehicles.
Between 2012 and 2020, the Model S and Model X were equipped with vertical screens, which stood out due to their impressive size and orientation.
NHTSA closes its investigation into Tesla's 'Passenger Play' feature
The National Highway Traffic Safety Administration (NHTSA) has concluded its investigation into Tesla's 'Passenger Play' feature, stating it will not pursue a recall of the scrutinized vehicles. Passenger Play allowed passengers in the vehicle to play certain games like the Sky Force Reloaded while the vehicle was in motion. Tesla was quick to respond to NHTSA's concerns and issued an update that requires the vehicle to be in park before games can be launched.
The closure of the probe comes amidst continuing concerns over the potential for driver distraction.
Investigation Ends, Still Leaves Room for Future Actions
While NHTSA's conclusion signifies a milestone in Tesla's ongoing scrutiny, it does not entirely absolve the electric vehicle maker. The administration emphasized that the end of the investigation does not mean a safety-related defect doesn't exist. Furthermore, the NHTSA's decision opens the possibility for future action if additional concerns arise.
NHTSA's apprehensions were primarily rooted in Tesla's decision to allow video games to be played on the front center touchscreen of the vehicle while in motion. Having acknowledged these concerns, Tesla voluntarily took action by disabling the 'Passenger Play' feature through an over-the-air software update soon after NHTSA launched its investigation in December 2021.
Tesla's Voluntary Disabling of Feature Commended
The administration confirmed that Tesla reported a 97% completion rate of the software update disabling 'Passenger Play', within a month of its release. The agency lauded Tesla's swift action, which showcased a responsible approach toward ensuring driver safety and mitigating distractions. This action appeared to significantly address NHTSA's concerns, as the agency cited the importance of "affirmative technology-based lockouts" as more effective than merely using labels or disclaimer screens.
Ongoing Scrutiny of Tesla's Autopilot System
Despite the conclusion of this specific probe, Tesla remains under the lens of the NHTSA, which is currently investigating Autopilot. The investigation, covering approximately 830,000 Tesla vehicles, aims to understand better human factors concerning Tesla interfaces and the dynamic driving task.
A History of Safety First
Tesla has always portrayed itself as an automaker that prioritizes safety. From advanced driver assist systems to top-tier safety ratings, the electric car manufacturer has consistently sought to revolutionize transportation safety norms. The swift action in disabling the controversial 'Passenger Play' feature further underscores the company's commitment to road safety and user well-being.
Tesla’s case serves as a potent reminder for all automakers that in-vehicle infotainment devices must balance entertainment and safety. In 2014, the NHTSA issued guidelines encouraging automakers to design in-vehicle devices so the driver can’t use them to perform inherently distracting secondary tasks while driving. As the lines between automobiles and technology blur, the importance of these guidelines will only grow.
Although the 'Passenger Play' investigation has concluded, Tesla’s journey with the NHTSA is far from over. The ongoing probe into Tesla’s Autopilot system indicates that the auto giant will remain under close watch to ensure the highest levels of safety for users and fellow road users alike.
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