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Tesla Q1’23 Earnings Ahead

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Tesla (TSLA.US) will release its Q1’2023’19 results today after the trading session, reporting on a quarter in which the company recorded a record number of deliveries. The market consensus is for Tesla’s revenue to reach $23.54 billion. This would represent year-over-year growth of approximately 24%. Market expectations in terms of EPS are for $0.87 per share. 

Tesla reported Q1 2023 deliveries earlier this month, indicating that unit sales rose by around 36% year-on-year to 422,875 cars after it slashed prices on its most popular vehicles. Investors, however, had expected better. By comparison, despite significant price cuts (almost 20% on some models), Tesla’s deliveries were up less than 5% year-on-year in the December quarter. What’s more, the year-over-year growth rate was also well below the long-term compound growth rate of 50%, which is the company’s target. While higher volumes are positive, Tesla’s average selling prices in Q1 are likely to be significantly lower and margins are likely to be under pressure. For comparison, automotive gross margins were almost 33% in Q1 2022 and could fall below 25% in Q1 2023. On the other hand, Tesla may be able to offset some of the impact of price cuts through improved economies of scale and easing supply chain issues.

Overall, the outlook for Tesla appears to be positive despite slower-than-expected sales and potential pressure on margins. There are several factors that could help Tesla in the near term. Firstly, Tesla is likely to strengthen its ageing model line-up. The Cybertruck pickup is likely to enter production this year. The car market’s transformation to EVs may gain momentum as the Biden administration recently proposed stricter emissions standards that would require EVs to account for as many as two out of three new vehicles sold in the US by 2032. Tesla will remain a big beneficiary of the shift towards electric vehicles, given its well-oiled supply chain, superior electric powertrains and leadership in software and autonomous driving technology.

Source: xStation 5

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