During Tesla’s quarterly earnings call, worries over the automaker’s declining profits were confirmed as the company revealed its net income had declined 24% from last year’s $3.32 billion.
In total, Tesla’s quarterly net income fell $810 million to $2.51 billion, despite an 18% increase in automotive revenue. The reason for this year’s tighter margins, according to CEO Elon Musk, is a mixture of increasing production costs and the “underutilization of new factories,” impacting the company’s ability to retain its former profitability. On the April 19 earnings call, the entrepreneur also told investors he expects the U.S. economy to encounter “stormy weather” for the remainder of the year.
Before 2023, the brand rarely offered discounts due to its leadership’s distaste for hosting sales. This sentiment seemed to change this year, as Tesla has made price cuts on six separate occasions since January. On Wednesday’s earnings call, Shareholders were told that the cause of this reversal is the automaker’s new focus on demand over profitability. “We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice, versus a lower volume and higher margin,” explained Musk. The statement echoes growing concerns over new car affordability, and its long term impacts on manufacturer sales.
Investors also learned that Tesla’s long-awaited Cybertruck would be part of a special “delivery event” sometime in Q3. The electric pickup was originally revealed in 2019, but the company has encountered considerable manufacturing delays due to supply chain disruptions and pandemic-related shutdowns. While this means the vehicle will finally make its way into the hands of consumers, Musk made clear on the earnings call that it would be another year before the automaker is capable of full-scale production.