8:22 am, April 20, 2023
Tesla endured a difficult start to the year after its decision to cut prices caused used EV prices to plummet, new figures have revealed.
Figures published this week show that the Texas-based firm saw its net income fall by 24 per cent in the first three months of 2023.
Accounts show the company made $2.51bn (£2.01bn) in Q1, down from $3.32bn (£2.67bn) during the same period last year.
Revenue rose by 24 per cent to $23.33bn (£18.75bn), but the outfit’s operating profit margin fell.
Tesla made an adjusted 85 cents per share in the first quarter, matching the expectations of analysed, who had expected profits to fall because of the price cuts.
At the start of the year, boss Elon Musk shocked the automotive industry by slashing the price of the Model 3 and Y.
Several experts have blamed the decision for the dramatic fall in used EV prices that have followed, with one retailer telling Car Dealer that Musk was ‘not on my Christmas card list’.
Earlier this month, we reported how car supermarket group Car Planet are now refusing to stock used electric cars due to them being deemed ‘high risk’.
That followed similar sentiments being expressed by a panel of independent dealers at our Car Dealer Live conference in Gaydon.
However, the decision to cut prices did see Tesla’s sales rise by 36 per cent to a record 422,875 vehicles worldwide in Q1.
However, margins were down as a result of the price cuts with analysts estimating that the average Tesla sold for $46,850 (£37,650) last quarter, compared to $52,100 (£41,870) a year earlier.
The company produced nearly 18,000 more vehicles than it sold during the quarter, indicating softening demand.
Overall, Tesla’s operating margin fell from 19.2 per cent to 11.4 per cent this quarter.
Reacting to the results, Kevin Tynan, senior automotive analyst at Bloomberg Intelligence, said: ‘Some will believe Tesla has a large margin advantage over legacy automakers that they can keep cutting prices and still lead in gross margin because they have a superior manufacturing process. It isn’t true.’
Following the publication of the results, Tesla boss Musk another wave of price cuts for models in the US.
Around $3,000 (£2,400) was slashed from all versions of the Model Y with reductions also made once again the the Model 3.
It means that the lowest-priced Dual Motor Model Y now costs $46,990 (£37,800), the Long Range costs $49,990 (£40,200) and the Y Performance will set buyers back $53,990 (£43,40o).
The Model 3 Rear Wheel Drive, Tesla’s lowest-priced vehicle, saw a cut to $39,990 (£32,150).
