/Tesla (TSLA) First Quarter 2023 Earnings Report

Tesla (TSLA) First Quarter 2023 Earnings Report

Employees at the Tesla Gigafactory Berlin Brandenburg work on the final inspection of the finished Model Y electric vehicles. The Tesla plant was inaugurated and put into operation on March 22, 2022.

Patrick Pleuil | Image Alliance | fake images

Shares of electric vehicle maker Tesla fell more than 4% after the company reported first-quarter earnings after the bell. Here are the results.

  • Earnings per share: 85 cents adj. vs 85 cents expected, based on average analyst estimate compiled by Refinitiv
  • Revenue: $23.33 billion vs. $23.21 billion expected, according to Refinitiv estimates

Net income came in at $2.51 billion, down 24% from last year, while GAAP profit came in at 73 cents, down 23% from the prior-year quarter.

Tesla specified in a shareholder presentation that “underutilization of new factories” accentuated margins, along with higher costs for raw materials, commodities, logistics and warranty, and lower income from environmental credits, all of which contributed to the fall in sales. earnings last year.

Automotive revenue, Tesla’s core segment, reached $19.96 billion in the quarter, up 18% from last year. Total revenue increased 24%. Automotive regulatory credit revenue for the first three months of 2023 was $521 million, down from $679 million in the first quarter of last year.

In an earnings call, CEO Elon Musk stressed an “uncertain” macroeconomic environment that could affect people’s car-buying plans. During a question-and-answer session with analysts, Musk said he expected 12 months of “stormy weather” in the economy. He warned that “every time the Fed raises interest rates, that’s the equivalent of a rise in the price of a car.” He also said that whenever there is uncertainty in the economy, people generally put off “big new capital purchases like a new car.”

He said: “We’ve felt that driving higher volumes and a larger fleet is the right choice here, rather than lower volume and higher margin,” but noted that he expects Tesla vehicles “over time can turn a profit.” significant”. through autonomy.

When the company began discussing its ambitions in self-driving technology in 2016, Musk said he would go on a hands-free tour of the US in late 2017. He has yet to complete that mission.

Tesla Energy’s revenue soared to $1.53 billion, up 148% compared to the same period last year. Tesla’s deployment of energy storage systems increased to 3.9 GWh, or by 360%, the company said. These lithium-ion battery-based energy storage systems, made by Tesla, include the battery backup for the home, called the Powerwall, and the large-scale Megapack system that allows utilities to store and use more power generated from renewable, but intermittent sources, such as solar power. and wind

Tesla’s first-quarter earnings call was broadcast live via Twitter, a first for the electric vehicle maker. CEO Elon Musk sold billions of dollars of his Tesla stake in 2022 to finance a $44 billion buyout of the social media company, where he, too, is now CEO.

The company cut prices for its vehicles late last year and through the first quarter of 2023, including additional cuts Tuesday night. At the same time, Tesla is drawing up ambitious expansion plans and higher capital expenditures.

Tesla currently sells four EV models, which are produced at two vehicle assembly plants in the US, one in Shanghai and one outside Berlin.

Read more about electric vehicles from CNBC Pro

Shareholders who questions submitted Ahead of the earnings call for management consideration, we’re looking for updates on the company’s sci-fi-inspired keystone Cybertruck, the company’s energy division and the timing for a new vehicle model from Tesla.

On the call, Musk said that Tesla is now building “alpha versions of the Cybertruck” on a pilot line. The company intends to produce the Cybertruck at its Austin, Texas factory. Musk said he anticipates an event to kick off Cybertruck deliveries in the third quarter of 2023.

In 2023, Tesla expects to produce 1.8 million vehicles, Musk reiterated, or possibly an “upside” volume of 2 million vehicles this year.

In early April, Tesla reported vehicle deliveries of 422,875 vehicles in the first quarter, the closest approximation of sales disclosed by the company. Production was slightly above deliveries for the first three months of 2023 at 440,808 vehicles.

A month earlier, Musk announced plans to build a Tesla factory in Monterrey, Mexico, a day’s drive from a relatively new factory in Austin, Texas. And more recently, Tesla said it plans to set up a factory to make Megapacks, or large energy storage systems based on lithium-ion batteries, in Shanghai.

according to a financial file posted in late January, Tesla expected to spend between $7 billion and $9 billion in 2024 and 2025, an increase in capital spending of about $1 billion over the next two years.

Tesla shares have rebounded this year from a dismal 2022, when they lost about two-thirds of their value along with a drop in tech companies. The stock is up 48% in 2023.

LOOK: CFRA’s Garrett Nelson Bullish on Long-Term Earnings Growth for Tesla

We're bullish on long-term earnings growth for Tesla, says CFRA's Garrett Nelson