Tesla
TSLA
Tesla reported delivery numbers for Q1 2023 earlier this month, indicating that unit sales grew by about 36% year-over-year to 422,875 cars after it slashed prices on its most popular vehicles. However, investors were expecting better. For perspective, despite the sizable price cuts (almost 20% on some models), Tesla’s deliveries grew by under 5% versus the December quarter. Moreover, year-over-year growth rates were also well below the 50% long-term compound growth rates that the company is targeting. While higher volumes are positive, Tesla’s average selling prices are likely to trend meaningfully lower in Q1 and margins are likely to face pressure. For perspective, automotive gross margins stood at nearly 33% in Q1 2022, and the number could likely fall below 25% in Q1 2023. That said, Tesla could offset some of the impacts of the price cuts, via better economies of scale and easing supply chain issues.
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