• 2 million vehicle deliveries are achievable in 2023 if the macroeconomic situation doesn’t worsen.
• Gross profit was down 17% YoY to $4.5 billion due to price cuts, raw material inflation, exchange rate impacts and other factors.
• 3.9 GWh of energy storage was shipped during Q1 2023, Tesla’s highest yet.

Tesla’s Q1 2023 deliveries stood at 422,875 vehicles globally and registered a total revenue of $23.3 billion, a YoY increase of almost 25%. With Tesla announcing price cuts for its models starting from January, vehicle deliveries also saw a 36% YoY boost. Tesla’s sales increased significantly across the US and China, accounting for 40% and 33% of its global deliveries, respectively. Almost 98% of Tesla’s sales came from the Model Y and Model 3. During Q1, the Model Y became the best-selling car in Europe and the best-selling non-pickup vehicle in the US. The Model 3’s sales also increased significantly in Europe, with almost 29,000 of them being sold in the continent during Q1. As the Berlin factory only produces the Model Y, all the Model 3s sold in Europe were imported from China.

Financial highlights

• Revenue from Tesla’s automotive segment stood at nearly $20 billion, an 18% YoY increase. Automotive sales accounted for almost 95% of the revenue but revenue from the sale of regulatory credits and vehicle leasing declined significantly.
• Tesla's revenue from other business lines, such as energy deployment and services, increased by 78% YoY to $3.3 billion. During Q1, Tesla deployed a record Megapack storage, totaling 3.9 GWh and growing 360% YoY, the highest in a single quarter.

• Although Tesla generated strong revenue in Q1, gross profit declined by 17% YoY to $4.5 billion and net profit declined by 23% to $2.5 billion. High vehicle deliveries and growth in other business lines helped the revenue, but the lowered vehicle ASPs, high raw material costs due to inflation, increased logistics costs, costs associated with the ramping up of the 4680-cell production, lower-than-expected utilization of the Berlin factory and negative exchange rate impacts all played a role in the lowered profits compared to a year ago.
• Tesla’s Q1 operating profit was 11.42%, a decline of 4.6% sequentially. Tesla claims to have a better position than its competitors who are still struggling through the challenges of reducing EV unit costs. Tesla aims to leverage its position as a cost leader, which it has achieved through increased penetration of in-house designed controllers, batteries and drive units.
• Q1 R&D expenses were $771 million, 3.3% of total revenue. Tesla is developing a 360-degree ecosystem – Tesla OS. This will help the company reduce dependency on third-party software and cloud subscriptions for its day-to-day work, besides helping in the vertical integration of software-based services and better cost control.

Outlook

Tesla’s strong position in the auto market has also helped its market outlook. Price cuts have made Tesla’s vehicles more affordable and with its Model Y and Model 3 becoming eligible for the tax credit subsidy in the US, we expect Tesla to capture over 50% of the country’s EV market. In its earnings call, Tesla also signaled more price cuts. It also plans to open another factory in Shanghai to focus on the production of cells and batteries as part of its 100-GW cell factory capacity announced last year.

Tesla expects to start deliveries of its long-awaited Cybertruck in Q3 2023. The company is also working on its next-generation vehicle platform.

With a strong start, Tesla aims for 1.8 million global deliveries during 2023, but 2 million is achievable if the macroeconomic situation does not deteriorate significantly.

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