Tesla posts Q1 2023 financial report with strong margins despite price cuts

Tesla has published their Q1 2023 financial results this afternoon, and after cutting prices across their lineup several times this year, was still able to maintain their strong automotive gross margins.

Earnings per Share

Tesla posted $0.85 non-GAAP earnings per share in Q1, matching the consensus estimate of $0.85.

Revenue

Tesla had a strong quarter in terms of revenue, growing 24% year-over-year (YoY), recording $23.3 billion in revenue in Q1, almost matching the $23.4 billion estimate by analysts. It was however a small 4% decrease quarter-over-quarter QoQ).

Tesla posted a $2.513 billion GAAP operating income in Q1, a 23% decrease YoY and % increase QoQ. Overall, the company posted a GAAP automotive gross margin of 19.3%, lower than the 25.9% in the final quarter of the year due to the multiple price cuts so far in 2023, which Tesla said in their report could continue and will be based on ongoing cost reductions.

Our near-term pricing strategy considers a long-term view on per vehicle profitability given the potential lifetime value of a Tesla vehicle through autonomy, supercharging, connectivity and service. We expect that our product pricing will continue to evolve, upwards or downwards, depending on a number of factors.

Although we implemented price reductions on many vehicle models across regions in the first quarter, our operating margins reduced at a manageable rate. We expect ongoing cost reduction of our vehicles, including improved production efficiency at our newest factories and lower logistics costs, and remain focused on operating leverage as we scale.

Regulatory Credits

Regulatory credits sold to other automakers was up quarter over quarter to from $467 million to $521 million, but down YoY from $679 million in Q1 2022.

Tesla (TSLA) shares are trading down about 3% in after hours trading at the time of publication.