Tesla recently published its first-quarter earnings report and reported earning $2.9 Billion net income on revenue of $23.3 Billion for Q1 2020 - representing an increase of 24 % year over year compared with $18.7 billion reported for Q1 2019.
Noteworthy is the decline of gross margins for this company to 19.3 percent, reflecting how its relentless price cutting strategy has begun to impact its bottom-line. Quarter-over-quarter gross margins decreased 18.9% while year-on-year gross margins fell 33%.
As a result of Tesla's earnings report, many analysts were critical. Jesse Cohen, senior economist of Investing.com stated in an email to Tesla customers that its poor quarter was evidence of growing macroeconomic unrest, impacting demand for electric cars manufactured by them. Tesla also faces near-term obstacles including persistently high inflation and an imminent economy slowdown that must be overcome in order to remain successful in business.
In a statement to shareholders, the company explained:
Earnings arrived after Tesla released an underwhelming delivery and production report, in which they claimed they delivered 422,875 EVs to customers during the first quarter of 2023, with 412180 Model 3s/Ys sold and 10,695 Ss/Xs delivered compared with what Wall Street expected: 432,000 deliveries!
Tesla's price fluctuations have marked its first quarter in the US as it struggles with increased competition and slow demand for their vehicles. Recently, they reduced Model 3 & Model Y vehicle prices again within one month, and their lowest priced electric vehicle now starts under $40,000. Overall this year alone, Tesla has reduced prices five times!
Tesla's recent moves have reignited an electric vehicle war between Ford, GM Volkswagen and other rivals to take down its top spot on EV charts.
Tesla Investor Day in the first quarter was an overly-hyped event where Elon musk unveiled Tesla's Third "Master Plan." Tesla addressed energy storage, supply chain management, capital investments and charging infrastructure but some investors left dissatisfied due to lack of product information.
Analysts speculated about the effect of Tesla's price cut on their profit margins, which have historically been some of the highest in industry.
Wedbush analyst Dan Ives stated in his report that aggressive Tesla pricing cuts were an intelligent strategy to protect its EV turf and create an iron fence surrounding their established consumer base. Unfortunately, price cuts come at a cost; thus causing friction between volumes and margins leading up to earnings for fiscal year 2023 and beyond.
Tesla's chief executive officer proclaimed in January that they wouldn't fall below margins of 20% and an overall average selling price of $47,000, yet according to today's reports this prediction appears too optimistic.
Noteworthy is the decline of gross margins for this company to 19.3 percent, reflecting how its relentless price cutting strategy has begun to impact its bottom-line. Quarter-over-quarter gross margins decreased 18.9% while year-on-year gross margins fell 33%.
As a result of Tesla's earnings report, many analysts were critical. Jesse Cohen, senior economist of Investing.com stated in an email to Tesla customers that its poor quarter was evidence of growing macroeconomic unrest, impacting demand for electric cars manufactured by them. Tesla also faces near-term obstacles including persistently high inflation and an imminent economy slowdown that must be overcome in order to remain successful in business.
In a statement to shareholders, the company explained:
At first, our operating profit margins decreased at an acceptable rate following price reductions across all regions and vehicle models in the first three months. Since then, however, our cost reduction efforts are expected to accelerate, including increased production efficiency at our newer factories as well as decreased logistics expenses.
Earnings arrived after Tesla released an underwhelming delivery and production report, in which they claimed they delivered 422,875 EVs to customers during the first quarter of 2023, with 412180 Model 3s/Ys sold and 10,695 Ss/Xs delivered compared with what Wall Street expected: 432,000 deliveries!
Tesla's price fluctuations have marked its first quarter in the US as it struggles with increased competition and slow demand for their vehicles. Recently, they reduced Model 3 & Model Y vehicle prices again within one month, and their lowest priced electric vehicle now starts under $40,000. Overall this year alone, Tesla has reduced prices five times!
Tesla's recent moves have reignited an electric vehicle war between Ford, GM Volkswagen and other rivals to take down its top spot on EV charts.
Tesla Investor Day in the first quarter was an overly-hyped event where Elon musk unveiled Tesla's Third "Master Plan." Tesla addressed energy storage, supply chain management, capital investments and charging infrastructure but some investors left dissatisfied due to lack of product information.
Analysts speculated about the effect of Tesla's price cut on their profit margins, which have historically been some of the highest in industry.
Wedbush analyst Dan Ives stated in his report that aggressive Tesla pricing cuts were an intelligent strategy to protect its EV turf and create an iron fence surrounding their established consumer base. Unfortunately, price cuts come at a cost; thus causing friction between volumes and margins leading up to earnings for fiscal year 2023 and beyond.
Tesla's chief executive officer proclaimed in January that they wouldn't fall below margins of 20% and an overall average selling price of $47,000, yet according to today's reports this prediction appears too optimistic.
