Published , by Donovan Erskine
Published , by Donovan Erskine
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:
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.