Tesla met earnings expectations for the first quarter, but their gross profit margins for the period were shockingly bad, especially in the automotive sector. Excluding regulatory credits, Tesla’s gross profit margin was just below 16%, significantly lower than the roughly 24% reported in Q4 2022. The gross profit margin per vehicle sold was also disappointing, at about $6,800 compared to the $15,700 reported a year ago. Despite this, Tesla’s profits were still healthy, with earnings per share at 85 cents and sales of $23.33 billion, just slightly below the forecasted $23.67 billion. Tesla’s other businesses are doing well, generating $1.1 billion in gross profit, and the company deployed a record-breaking 3.9 gigawatt hours of battery storage in the quarter. However, with most of its revenue coming from its car business, Tesla’s stock fell 3.8% in after-hours trading and 2% during regular trading hours on Wednesday.
The company has slashed its vehicle prices repeatedly to boost sales, leading to lower gross profits. The first-quarter automotive gross-profit margins are projected to be just above 20%, compared to roughly 25% in Q4 2022 and over 30% in Q1 2022. Analysts will be looking for management commentary about margins for the rest of the year during Tesla’s upcoming conference call. Investors will also want to hear about order activity and demand following vehicle price cuts, with CEO Elon Musk previously reporting orders coming in at twice Tesla’s manufacturing capacity.