April 21, 2023

Takeaways From Tesla’s Q1 2023 Earnings Call

Tesla held its Q1 2023 earnings call on Wednesday, including questions from shareholders and crucial financial details from the first three months of the year. Amidst looming concerns about how price cuts might affect margins, Tesla managed to reach Wall Street earnings expectations, posting yet another profitable quarter.

Above: A Tesla Model Y (Image: Casey Murphy / EVANNEX).

In the first quarter, Tesla met Wall Street expectations of $0.85 earned per share (non-GAAP), as reported by electrek. The automaker reported $23.3 billion in Q1 revenue, missing Wall Street expectations by about $300 million. Still, electrek also points out that Tesla reported a 19.3-percent gross margin on its electric vehicles in the quarter, remaining the industry leader despite price cut fears.

Tesla also released its Shareholder’s Letter on Wednesday, pointing to the accomplishment of maintaining such a high gross margin while reducing prices.

“Although we implemented price reductions on many vehicle models across regions in the first quarter, our operating margins reduced at a manageable rate,” Tesla wrote in the letter. “We expect ongoing cost reduction of our vehicles, including improved production efficiency at our newest factories and lower logistics costs, and remain focused on operating leverage as we scale.”

During the earnings call, Tesla also pointed out other accomplishments and hosted questions from shareholders. CEO Elon Musk’s opening remarks noted the Model Y becoming the best-selling vehicle of any kind in Europe, as well as the best-selling non-pickup vehicle in the U.S. Musk also said that Tesla’s Full Self-Driving beta has crossed the 150 million-mile mark.

The call was hosted by Tesla executives including VP of Investor Relations Martin Viecha, CFO Zachary Kirkhorn, Senior VP of Powertrain and Energy Andrew Baglino, and VPs of Supply Chain Karn Budhiraj and Roshan Thomas. Analysts from several investment firms also participated in the call including Piper Sandler’s Alex Potter, Goldman Sachs’ Mark Delaney, Morgan Stanley’s Adam Jonas and more.

Baglino noted that Tesla still plans to gradually ramp-up Cybertruck production next year. Musk added that the production of the futuristic vehicle would not be "made in the way that other cars are made," saying that it would take time to ramp — despite an "indiscernable" amount of demand.

Tesla also touched on its energy storage business in a question from shareholder Jeffrey L. on Say Technologies, a platform where investors can submit questions prior to the call. Jeffrey asked if Tesla still believed its energy business would be bigger than its automotive business, to which Musk responded that auto revenue may always remain higher — though energy will be needed increasingly down the road.

“Yes, I should just clarify like bigger than auto from the standpoint of like total Gigawatt-hours deployed,” Musk said in response. “So, it’s possible automotive revenue may be higher, but GWh I think will be probably higher with stationary storage. If you just look at what's needed to transition the world to a sustainable energy economy, there is more stationary energy storage needed than there is mobile energy storage.”

A live webcast of the earnings call was hosted by Tesla on YouTube (as seen below), where users can still listen to audio from the call. Additionally, you can view a full transcript of the call over at Seeking Alpha.