TSLA Q1’FY23 Earnings Summary

1. Revenue of $23.3 bil missed estimates (of $23.78 bil) by 2%

2. EPS of $0.85 barely missed estimates (of $0.86) by 1%; also lower than the $1.19 in Q4’FY22

3. Operating margin declined significantly from 16.0% (Q4’FY22) to 11.4%

4. EBITDA margin (adjusted) declined from 22.2% (Q4’FY22) to 18.3%

5. Free cash flow declined significantly from $1.4 bil (Q4’FY22) to $441 mil

6. Total production improved slightly q-o-q from 439,701 to 440,808 (+44% y-o-y)

7. Total deliveries improved by 4.3% q-o-q from 405,278 to 422,875 (+36% y-o-y)

While the drop in their Q1 margin was significant, Tesla still remains higher than other automakers. Tesla’s Cybertruck production is also set to begin later this year in Texas, alongside progressing on its next-gen vehicle platform.

Elon Musk said the uncertain macroeconomic environment is one of the factors that could affect car purchases. He expects a challenging economic period and emphasized that Tesla is prioritizing higher volumes and larger fleets instead of lower volume and higher margins. That said, he said that Tesla will continue lowering its vehicle prices to boost demand. The price cuts have been significant, with Model 3 base price dropping below $40,000 in the US for the first time in years, reflecting a ~$7,000 decrease year to date (2023)! He is optimistic about generating significant profit through autonomous vehicles/robotaxis in the future - not the first he said that, though.

Also worth noting that this is the first time Tesla did not disclose its automotive gross margin in years.

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