Tesla (TSLA) Q1 2023 profit margins are all materially lower from year-ago quarter

Tesla's (TSLA) latest earnings reveal a sharp drop in profit margins compared to last year.


Tesla’s (TSLA) Q1 2023 earnings report was packed with interesting details about the leading electric vehicle manufacturer. In a section breaking down its profit margins for the various aspects of its business, we see that Tesla’s profit margins have significantly lowered since Q1 of last year.

On the fourth page of Tesla’s Q1 2023 earnings report, the company shares profit margins for operation, EBITDA, and total GAAP Gross. Here’s how the numbers compare to Q1 2022:

The black key fob of a Tesla Model X.

Source: Tesla

Total GAAP gross margin Q1 2022: 29.1%
Total GAAP gross margin Q1 2023: 19.3%

Operating margin Q1 2022: 19.2%
Operating margin Q1 2023: 11.4%

(Non-GAAP) Adjusted EBITDA margin Q1 2022: 26.8%
(Non-GAAP) Adjusted EBITDA margin Q1 2023: 18.3%

In an unexpected move, Tesla actually speaks directly to what might be causing the profit issues, saying that it increased vehicle deliveries despite “margin headwind from underutilization of new factories.” If Tesla is having an underutilization issue, that could become a larger problem if the company continues to increase its production capacity in the future.

It’s worth noting that Tesla has continuously reduced prices on its vehicles in recent months. Specifically, Tesla has already made 6 price cuts in 2023. This likely contributed to the company’s decreased profit margins in Q1 2023.

With Tesla experiencing a sharp drop in profit margins compared to last year, we’re curious to see if the topic comes up during its upcoming earnings call. For all of the other news out of Tesla’s Q1 2023 earnings report, Shacknews has that too.

News Editor

Donovan is a young journalist from Maryland, who likes to game. His oldest gaming memory is playing Pajama Sam on his mom's desktop during weekends. Pokémon Emerald, Halo 2, and the original Star Wars Battlefront 2 were some of the most influential titles in awakening his love for video games. After interning for Shacknews throughout college, Donovan graduated from Bowie State University in 2020 with a major in broadcast journalism and joined the team full-time. He is a huge Scream nerd and film fanatic that will talk with you about movies and games all day. You can follow him on twitter @Donimals_

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