Tesla: Q1 2023 Deliveries

What to make of the 422,875 cars delivered? By Benjamin Tan

After recent price cuts, a base Model 3 in white costs $42,990 in America

Tesla (TSLA 0.00%↑) reported Q1 2023 production and delivery numbers on April 2, after a full quarter of unprecedented discounting across all models. Amid softer economic conditions and much higher interest rates, the pricing move was deemed necessary by Tesla to keep its Gigafactories (existing and new) running at full capacities without excess inventory accumulation.

Growth continues for Tesla, as Q1 2023 delivery numbers were aided by price reductions as much as 20% on Model Y. Tesla vehicles had seen continual price increases throughout most of 2021 and 2022; reduced prices are now close to what they were at the beginning of 2021

Many other automakers responded in kind after the Tesla offensive. For example, Ford reduced prices on the Mustang Mach-E electric SUV, a competitor to Tesla’s Model Y; both Chevrolet and Hyundai also adjusted their pricing in recent months on their EV line-up.

Q1 2023 Numbers: Summary

Some highlights from the Tesla Q1 2023 production and delivery press release:

• Production of 441k up 44% yoy

• Deliveries of 423k up 4% qoq and 36% yoy

• Vehicles delivered were roughly in line with Bloomberg consensus of around 420k

• Model 3 and Model Y deliveries were 412k, up 6% qoq and 40% yoy

Pedal to the Metal: Full Charge towards Scale

For 2023, the company is aiming for a total production of 1.8-2.0 million vehicles, up from 1.37 million in 2022. With Giga Austin and Berlin both ramping up as planned this year, combined with Giga Shanghai expansion, production numbers appear on track for a massive scaling in 2023. This is key to Tesla sustaining healthy gross margins (defined as above 20%) and forging ahead to win more market share globally. No other automaker is producing fully-electric vehicles at the same scale that Tesla does, or generating gross margins anywhere close.

Gross margins continue to be industry leading for electric vehicles; even with price cuts, Tesla is confident that they will remain above 20%, thanks to economies of scale

Eyes on Q1 2023 Results: April 19th and What to Look Out For

With the release of full Q1 2023 results coming on April 19th, key items to watch include:

• Pricing strategy going forward - will there be more price cuts needed to push demand in line with aggressive production targets?

• How will automotive gross margins move over the course of 2023? On one hand, inflationary pressures are easing and unit costs should fall in tandem with scale, but on the other hand, margins are pressured by price cuts

• State of car financing market - any changes to lending practices that may impact Tesla in the wake of recent bank runs?

• Latest take on production target (1.8-2.0 million) for FY 2023

• Chinese market post-lockdown - update on demand

• Cybertruck - still on track for end-2023 mass production?

• Latest management commentary on 50% CAGR target in the coming years

(Author is long Tesla)

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