Tesla share price falls as Elon Musk’s company reveals drop in profits

Tesla revenues for first quarter this year are lower than what it made in the same time last year

Tesla’s profits fell sharply in the first three months of the year after the company slashed the prices of its vehicles to boost sales.

Shares of the electric vehicle manufacturer dropped by over three per cent on Wednesday following the release of its financial report for the first quarter of 2023.

The company’s chief Elon Musk said on Wednesday that its 2023 first-quarter revenue was $2.5bn, down from the $3.7bn it made in the last quarter of last year.

Tesla’s first-quarter revenue for this year is also lower than the $3.3bn it made in the first quarter of 2022.

While the company holds the record of selling more electric cars in the US than all its competitors combined, it faces growing competition from the likes of General Motors, the Ford Motor Company and Volkswagen, all of whom have also entered the electric vehicle market.

To hold its ground and boost sales, Tesla made a number of price cuts this year across its vehicle models.

It slashed the prices of some of its Model Y and Model 3 vehicles by as much as six times this year alone to compete with legacy US carmakers.

While the average selling price of its vehicles in the first quarter was down by about 11 per cent from about $51,400 in the last quarter of 2022 to $46,000 in the current one, the price cuts have coincided with only 4 per cent higher deliveries.

In its report, the company said it produced over 440,000 vehicles and delivered over 422,000 vehicles in the first three months of 2023.

Over 412,000 of the deliveries were of the company’s Model 3/Y and 10,695 were of its Model S/X.

“We’re taking a view that pushing for higher volumes and a larger fleet is the right choice here... versus a lower volume and a higher margin,” Mr Musk said in a conference call discussing the quarterly financial results.

The company noted that it expects a further “evolution” of its product pricing.

“We expect that our product pricing will continue to evolve, upwards or downwards, depending on a number of factors,” the electric vehicle maker said.

“We expect ongoing cost reduction of our vehicles, including improved production efficiency at our newest factories and lower logistics costs, and remain focused on operating leverage as we scale,” Tesla noted.

The company also said in its report that its long-delayed Cybertruck remains on track to begin production later this year at its Gigafactory in Texas.

Mr Musk said deliveries for the Cybertruck are anticipated for the third quarter of 2023.