Lower prices, higher costs: Tesla with a slump in profits

In recent months, Tesla has lowered the prices for its electric cars several times. The strategy paid off insofar as a new record was once again set with 423,000 vehicles delivered between January and March 2023.

Tesla was also able to increase sales significantly – by 24 percent to 23.3 billion US dollars. Meanwhile, profitability has suffered greatly from the lower prices and higher material costs and investments in battery production.

Tesla also made the underutilization of the new factories responsible. In addition, income from the sale of CO2 certificates fell.

The operating margin collapsed to 11.4 percent – after 19.2 percent in the first quarter of the previous year. This puts Tesla ahead of the competition.

Tesla had to lose feathers when it won. The US electric car manufacturer closed the first quarter of 2023 with a plus of a good 2.5 billion dollars. Compared to the same quarter of the previous year, however, this means a decline of 24 percent.

Although Tesla was roughly in the range of analysts’ expectations, the share fell by six percent in after-hours trading. However, after the sharp slump last year, the paper had gained almost 50 percent in value since the beginning of 2023.

In any case, Musk is sticking to the goal of delivering at least 1.8 million – maybe even two million – Teslas by the end of the year. With the deliveries achieved in the first quarter, almost a quarter of this has already been achieved.

According to the Tesla boss, the price reductions also serve to keep demand for electric cars going despite the expected economic downturn. In addition, a large part of the price reductions were made possible by the increased and improved production capacities.

Higher quantities and a larger fleet are preferable to a lower volume and higher margin, Musk said in an interview with analysts after the results were published. According to Musk, Tesla will make significant profits in the future with autonomously driving cars.

Later this year, Teslas would be able to drive fully autonomously, like market watch quoted the Tesla boss. Musk has been making such and similar announcements for several years.

Musk expects the delivery of the Cybertruck to start this year, probably in the fall. The Gigafactory in Texas is currently making “alpha versions of the Cybertruck,” according to Musk according to CNBC.

Musk said nothing about possible new electric cars mentioned in the so-called Master Plan 3. There are reports that a small, affordable Model Y-style e-crossover could be on the way – which could soon be produced as four million a year.

There were only a few words about the announced next-gen platform. Progress is being made here, according to Musk. So we’ll have to wait for Tesla to release more information on this.