Tesla's Q1 2023 Earnings Show Lower Margins Amid Aggressive Price Cuts

By Kevin Armstrong
Tesla released its Q1 2023 earnings report
Tesla released its Q1 2023 earnings report
Tesla

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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Tesla Model 3's 2024 IIHS Safety Award Snub, While Model Y Shines

By Kevin Armstrong
Model Y Top Safety Pick
Model Y Top Safety Pick

The Insurance Institute for Highway Safety (IIHS) has once again raised the bar for vehicle safety in 2024, introducing more rigorous criteria to evaluate the protection vehicles offer to occupants and pedestrians alike. Amidst these enhanced standards, the Tesla Model Y stands out as a recipient of the prestigious Top Safety Pick+ award, affirming its position as a leader in automotive safety, a position it has held for years, also claiming last year’s title.

Innovative Safety Features

The 2024 Tesla Model Y has demonstrated outstanding performance across various safety tests, excelling in crashworthiness and crash avoidance capabilities. The vehicle earned the highest possible rating, 'Good'’ in all tested categories, including small and moderate overlap front tests, side impact tests, roof strength, and head restraint tests. Notably, Model Y's performance in the small overlap front test was particularly commendable, showcasing effective airbag deployment, well-maintained survival space for the dummy, and a low risk of significant injuries.

The Model Y has advanced safety features significantly contributing to its top-tier rating. Among these, automatic emergency braking stands out, displaying superior pedestrian detection and avoidance capabilities under daylight and nighttime conditions. Additionally, the vehicle's LED projector headlights received high praise for their illumination quality, ensuring optimal visibility without causing glare to oncoming traffic. Lars Moravy, VP of Vehicle Engineering at Tesla, explains why the company’s vehicles are so safe.

Recognizing the importance of safety for passengers of all ages, the Tesla Model Y's LATCH system for child seat anchors was rated 'Acceptable.'’ This reflects the vehicle’s commitment to accommodating families and enhancing safety for younger passengers, highlighting the ease of use and accessibility of the anchors.

Absence of Model 3

While the Tesla Model Y has proudly secured its place among the Insurance Institute for Highway Safety's (IIHS) Top Safety Pick+ awardees for 2024, the Model 3 was noticeably absent from this prestigious list. The reason behind this, as reported by Teslarati, sheds light on the stringent criteria set by IIHS and the potential for future inclusion of Model 3.

Historically, the Model 3 was honored with the Top Safety Pick+ award in 2020, 2021, and 2022 but was notably missing in 2023 and 2024. Joe Young of the IIHS explained to Teslarati the reason behind this absence: the Model 3 has yet to be evaluated in the institute's updated side crash test and lacks a rating in the updated moderate overlap crash test—both critical components of the award criteria for this year.

This lack of current evaluations means the IIHS cannot consider the Model 3 for either safety award at this time. However, it's not a definitive exclusion. The IIHS is open to recognizing the 2024 Model 3 later in the year as additional tests are completed and ratings are updated.

Tesla’s engineering focus on creating the safest vehicles in the world is evident, with an extremely low chance of roll-over and occupant injury, positioning the Model Y as the best-selling car globally and among the safest on the road.

Musk Provides Update on Tesla Roadster and Announces New Specs; Deliveries in 2025

By Kevin Armstrong
Roadster Closer to Reality
Roadster Closer to Reality

In a series of posts on X, Elon Musk stirred up some late-night excitement, offering tantalizing details about the new Tesla Roadster. Musk reached back to posts from 2018 to update his 374 million followers on X with the latest progress, suggesting that Tesla is on the brink of unveiling a vehicle that promises to redefine the boundaries of the automotive industry again.

Tonight, we radically increased the design goals for the new Tesla Roadster. There will never be another car like this, if you could even call it a car. -Elon Musk

A Leap Toward the Future

Musk kicked off the series of posts by returning to old Twitter posts from June 2018 when he announced that the Roadster would come with a SpaceX option package featuring around ten small rocket thrusters, hints at capabilities far beyond traditional sports cars. These thrusters are expected to dramatically enhance acceleration, top speed, braking, and cornering, with Musk going as far as teasing the possibility of flight.

Beyond Boundaries & Timelines

In 2018, Musk reflected on his automotive journey, from choosing a McLaren F1 over a house in Palo Alto. He updated that tweet by posting you will love the new Roadster more than your house. There’s no telling what happened behind closed doors, but with Cybertruck now out the door, several bright, creative engineers have moved to the next challenge, and given Musk’s posts, there has been a significant breakthrough.

Musk confidently states that there will never be another car like this, challenging the very definition of what a car can be. Completing the production design and announcing an unveiling by the end of the year set a clear timeline for its anticipated debut, matching what was predicated at a recent earnings call.

Collaboration and Innovation

The collaboration between Tesla and SpaceX symbolizes a fusion of automotive and aerospace technologies, promising a product demo that could be the most mind-blowing of all time. Musk's assertion that the Roadster could achieve a 0-60 mph time of less than one second—remarkably stated as the "least interesting part" sets unprecedented expectations for performance.

A Brief History and What We Know

Initially earmarked for a 2021 release, the Roadster's journey to production has been met with delays. Despite this, Musk has remained steadfast that this promised vehicle will not only shatter performance records but also redefine what electric cars are capable of.

Tesla's ambition for the Roadster is clear: to create the fastest production car in the world. With a target 0 to 60 mph acceleration time of under 1.9 seconds and a top speed exceeding 250 mph, the Roadster is poised to outperform even the most advanced sports cars, including Tesla's own Model S Plaid. Slave Popovski created a cool simulation animation of a drag race between the Standard Tesla Roadster and the SpaceX thruster version. He states that thrusters are only on for 1.1 seconds, and he uses motion physics to simulate online figures.

The Roadster's engineering marvel extends to its range and battery efficiency. Equipped with a 200 kWh battery pack, it aims to set a new standard with a range of up to 620 miles on a single charge.

Previously, we’ve heard numbers for a base model starting at around $200,000; the Roadster is positioned as a premium offering in the EV market. The limited-edition Founder's Series and the SpaceX Package will cater to enthusiasts and collectors, highlighting the Roadster's exclusivity.

As Tesla prepares for the most mind-blowing product demo of all time, Elon Musk's vision for the new Tesla Roadster is not just about creating another electric vehicle but pushing the limits of what's possible. With its groundbreaking design, unparalleled performance, and the hint of aerospace-inspired technology, the Roadster is shaping up to be a milestone in automotive history. With its groundbreaking design, unparalleled performance, and the hint of aerospace-inspired technology, the Roadster is shaping to be a milestone in automotive history.

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