Tesla (NASDAQ: TSLA) is coming off a record 12 months for electric vehicle sales. It delivered 1.8 million cars in 2023, including 1.2 million of its Model Y which became the best-selling vehicle of any kind, globally.
Tesla made headlines all 12 months long for slashing prices to spur demand, because consumers were suffering under the pressures of high inflation and rising rates of interest. The company reduced the sticker price of its electric vehicles by a mean of 25.1% between December 2022 and December 2023.
That significantly impacted the company’s bottom line. So, just how much of Tesla’s $78.5 billion in automobile sales during 2023 was profit?
Tesla’s earnings fell for the first time since 2017
In 2023, it cost Tesla $65.1 billion to fabricate and sell $78.5 billion value of electrical vehicles, which left the company with $13.4 billion in gross profit.
By comparison, in 2022, it cost Tesla $49.6 billion to fabricate and sell $67.2 billion value of electrical vehicles, leaving a gross profit of $17.6 billion. That represented a gross profit margin of 26.2%, which declined to 17.1% in 2023, highlighting the outcomes of Tesla’s price cuts.
On the underside line, Tesla’s companywide earnings per share — which contains the financial results of its solar, storage, and services businesses — came in at $3.12. It marked a 23% decline as compared with its 2022 result, and it was the first time the company’s annual earnings slipped since 2017.
Tesla’s price cuts have continued inside the early stages of 2024, so Wall Street analysts are betting its earnings could fall again this 12 months. Tesla stock has plunged 54% from its all-time high because falling earnings have forced investors to reconsider the company’s valuation, and it’d struggle to get well inside the short term.
But here’s something interesting to take into consideration. Based on Cathie Wood’s Ark Investment Management, nearly all of Tesla’s profit may not come from selling cars in the long term. It’d come from the company’s autonomous self-driving software instead.
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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Idiot has positions in and recommends Tesla. The Motley Idiot has a disclosure policy.
How Much Profit is Hiding Inside Tesla’s Enormous $78 Billion in Automotive Revenue? was originally published by The Motley Idiot