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Tesla's gross profit margin has declined continuously! Musk: or continue to reduce the price

2024-03-03 Update From: AutoBeta autobeta NAV: AutoBeta > News >


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Tesla released its financial results for the second quarter of 2023 on July 20, Beijing time. According to the financial report, Tesla's total revenue in the second quarter was $24.927 billion (about 180.1 billion yuan), up 47% from a year earlier, a record high and higher than the market expectation of $24.51 billion, while the net profit of returning home was $2.703 billion, up 20% from the same period last year.

It should be noted that although Tesla's revenue grew by nearly 50% in the second quarter, the profit level has declined for three consecutive quarters. According to the financial report, Tesla's gross profit margin fell to 18.2% in the second quarter, below market expectations of 18.8% and the lowest level in three years. For comparison, the gross margin in the first quarter was 19.3%, compared with 25% in the same period last year. In addition, Tesla's operating profit margin also fell to 9.62%.


As for the reasons for the decline in profit margins, Tesla said that it was mainly because the company's measures to boost sales through price cuts had hit profit margins and increased the production cost of its internally designed batteries (4680 batteries). The gross profit margin fell in the second quarter compared with the first quarter. However, Tesla said in the report: "if the macroeconomic situation continues to be turbulent and downward, Tesla will continue to sacrifice profit margins to promote sales growth."

As we all know, Tesla is not just a car company. According to the financial report, Tesla's automobile business accounted for 85% of the total revenue, reaching 21.268 billion US dollars (about 153.7 billion yuan), an increase of 46% over the same period last year, but Tesla did not separately disclose the gross profit and gross profit margin of the automobile business. Elsewhere, revenue from energy power generation and storage reached $1.509 billion (10.96 billion yuan), up 74% from a year earlier and down 1.31% from a month earlier. Revenue from services and other revenues was $2.15 billion (about 15.538 billion yuan), up 47% from a year earlier and 17% from a month earlier.


According to the global quarterly financial report data, a number of indicators of Tesla showed a significant growth trend in the second quarter of 2023 compared with the same period last year, but because Tesla significantly reduced the price of his models in many countries and regions, such as China, Japan, South Korea, the United States, and Europe, although the overall revenue rose, the price reduction also led to a decline in Tesla's profit margin, which was also expected. Earlier, Tesla CEO Elon Musk said that in the short term, the sacrifice of profits can actively strive for market share, even if the gross profit margin and profits fall, Tesla will continue to reduce prices to pursue sales, and made it clear that vehicle costs are falling, Tesla will continue to adjust vehicle prices and pursue sales rather than profit margins.

At this earnings meeting, Musk said that if the macroeconomic environment is unstable, Tesla may continue to cut prices, and stressed again: "I think it makes sense to sacrifice profit margins to produce more cars."

In terms of new car delivery, the price reduction strategy initiated by Tesla has indeed brought a significant increase in its sales. According to the data, Tesla produced a total of 479700 new cars worldwide in the second quarter, an increase of 86 percent over the same period last year, of which 19400 were Model Spicer X models and 460200 were Model 3Unip Y. a total of 466100 new cars were delivered, an increase of 83 percent over the same period last year, of which 19200 were delivered by Model Splash X and 446900 by Model 3Universe Y. This is Tesla's output and delivery volume of more than 400000 vehicles for three consecutive quarters.


As for the annual sales forecast, Tesla said that it still maintains the target of 1.8 million vehicles for the whole year. By the end of June, Tesla delivered a total of 889000 new cars worldwide in the first half of this year, achieving 49.39% of the 1.8 million sales target, which means that Tesla only needs to deliver about 910000 vehicles in the second half of the year to achieve the target.

Or affected by the results, as of July 19, US Eastern time, Tesla's share price fell 0.71% to 291.26 US dollars per share.

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