Tesla prepares to unveil quarterly financials

Company News

by Glenn Dyer

A significant week awaits Tesla as the company prepares to unveil its quarterly financials on Wednesday, potentially mirroring the outcomes of the same quarter in 2023.

In the first quarter of 2022, revenue surged by 24% to $US23.3 billion, with $US19.6 billion stemming from automotive sales, marking an 18% increase. However, earnings took a hit, plummeting by 24% to $US2.51 billion from the previous year's $US3.32 billion.

Tesla attributes this downturn to various factors, including the underutilization of new factories, which strained margins, alongside elevated raw material, commodity, logistics, and warranty costs, coupled with reduced revenue from environmental credits—all contributing to the decline in earnings.

Analysts anticipate that the forthcoming report may reflect these challenges, with potential dips in car sales, pricing battles in key markets like the US and China, and escalating operational costs, posing hurdles to CEO Elon Musk and the company's progress.

Some analysts, speaking anonymously to US business media, even suggest that Tesla might report either a loss or an ultra-low earnings figure, underscoring the severity of the challenges.

However, amidst these concerns, one certainty remains—Tesla's significant reliance on its colossal car plant in Shanghai, which has repeatedly played a pivotal role in bolstering the company's performance.

Notably, in March, the Shanghai plant played a crucial role in averting a more significant sales downturn than witnessed in the first quarter of this year. Tesla reported first-quarter vehicle deliveries of 386,810, reflecting an 8.5% decline from the same quarter the previous year, significantly below analysts' expectations of approximately 457,000 deliveries for the period.

Of these deliveries, Shanghai contributed substantially, with a total of 220,876 units in the March quarter, though slightly lower than the previous year's 229,916. However, a surge in production and deliveries in March alleviated some concerns.

According to the China Passenger Car Association, Tesla delivered 89,064 "made-in-China" units in March, surpassing the 88,689 units sold in March 2023 and marking a 47% increase from the 60,365 units sold in February.

January sales stood at 71,447 units, a slight increase from the same period in 2023 but a sharp drop from the record-setting 94,139 vehicles in December 2023.

In total, Tesla delivered over 947,000 vehicles from the Shanghai factory in 2023, nearly matching the plant's annual capacity. However, in the first quarter of 2024, Tesla sold 132,420 vehicles in China, down from 137,429 in the same period the previous year.

Of the 89,064 China-made vehicles in March, 26,666 were exported, indicating that Tesla sold 62,398 vehicles domestically, marking a 107% increase from February but an 18.6% decrease from March 2023.

Tesla China's exports in March dipped by 11.7% compared to February but surged by 118% from the same month the previous year.

In total, out of the 386,810 global deliveries, Shanghai contributed 220,876 units, emphasizing its pivotal role in the company's operations. Comparatively, around 166,000 vehicles were produced in Tesla's US plants—Texas and California, marking a decrease from the previous year's production figures.

Despite challenges, particularly in its US factories, Tesla's Shanghai plant remains a cornerstone, implementing price adjustments, financing deals, and prioritizing exports to mitigate adverse effects.

Nevertheless, reports emerged in late March indicating Tesla's reduction of the production week at the Shanghai plant to 5.5 days from the usual 6.5 days, suggesting ongoing challenges despite Shanghai's significant contributions.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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