Electric News Hubb
Advertisement
  • Home
  • Electric Equipments
  • Electric Vehicle
  • Contact us
No Result
View All Result
  • Home
  • Electric Equipments
  • Electric Vehicle
  • Contact us
No Result
View All Result
Electric News Hubb
No Result
View All Result
Home Electric Vehicle

Tesla pledges to cut costs amid ‘uncertain’ time

admin by admin
January 25, 2023
in Electric Vehicle



With the release of its Q4 2022 earnings today, Tesla is making it clear to shareholders that it plans to keep cutting the cost of its electric vehicles to withstand “uncertain” times.

If there were a theme to Tesla’s Q4 2022 shareholder letter published today, it would be cost-cutting.

Tesla started out by writing:

As we progress into 2023, we know that there are questions about the near-term impact of an uncertain macroeconomic environment, and in particular, with rising interest rates. The Tesla team is used to challenges, given the culture quired to get the company to where it is today. In the near term we are accelerating our cost reduction roadmap and driving towards higher production rates, while staying focused on executing against the next phase of our roadmap.

The company is making that statement after implementing some massive price cuts across its entire lineup earlier this month.

Investors are worried about the impact on the company’s profitability.

While we won’t know the exact impact until the next earnings report, shareholders do get some hints at the impact from the Q4 2022 results released today.

Tesla confirmed that 51% of the 405,000 vehicles it delivered in Q4 were delivered in December when Tesla started to offer some significant discounts on its vehicles.

Despite half of its deliveries getting discounted, Tesla only took a two-point hit on its automotive gross margin in Q4 – going from 27.9% in Q3 to 25.9% in Q4.

That’s encouraging for shareholders, but the gross margin hit is expected to be much bigger in Q1 since the price cuts are more significant than the discounts Tesla was offering in December 2022.

To further highlight opportunities to reduce costs, Tesla noted that it has been able to reduce its end-of-quarter delivery waves. The 51% of vehicles delivered in the third month of the quarter in Q4 is down from 74% in Q2.

Tesla says that it is working to keep bringing that percentage down for smoother deliveries throughout quarters, which should help with costs.

At the end of its shareholder’s letter, Tesla again reemphasizes that cost efficiency is crucial:

We are particularly focused on vehicle cost during this period of macroeconomic uncertainty, high-interest rates (thus higher cost of vehicle financing) and vehicle price deflation. We continue to focus on cost efficiencies while improving functionality and reliability. While cost-efficient manufacturing of EVs is still rare across most of the industry it is critical for profitability.

Tesla seems confident that it can keep its lead in selling electric vehicles profitably.

Electrek’s Take

I think Tesla is onto something here – especially with that last comment. It is almost a warning to the rest of the industry that if they can’t keep their EV cost down and start selling EVs profitably, they are in real trouble.

Today’s earnings were encouraging for investors with Tesla only taking a two-point hit on gross margins. Q1 will be much worse, but I now think it’s possible Tesla could still maintain something close to 15% gross margin despite the big price cuts.

Most automakers would sell their soul to the devil to get 15% gross margins, especially on electric vehicles.

It adds to my theory that Tesla might have just started an EV price war that it will likely win.

FTC: We use income earning auto affiliate links. More.



Source link

Previous Post

New Photo Reveals Tesla Semi’s Massive Battery System

Next Post

British Columbia mine grows its fleet of electric Sandvik loaders

Next Post

British Columbia mine grows its fleet of electric Sandvik loaders

Recommended

Tesla Megapacks keep airport and US Coast Guard station powered during natural disasters

January 30, 2023

Aquajet to showcase new Infinity oscillation technology

January 13, 2023

Don't miss it

Electric Vehicle

Cupra Born Introduction – CleanTechnica

January 31, 2023
Electric Equipments

John Deere introduces new P-Tier articulated dump trucks

January 30, 2023
Electric Vehicle

Tesla Megapacks keep airport and US Coast Guard station powered during natural disasters

January 30, 2023
Electric Vehicle

First 2024 GMC Hummer EV SUV Sells For $500,000 At Auction

January 30, 2023
Electric Vehicle

The Transformative Power Of Drones Has Only Just Begun

January 30, 2023
Electric Vehicle

Quick Charge Podcast: January 28, 2023

January 29, 2023

© 2022 Electric News Hubb All rights reserved.

Use of these names, logos, and brands does not imply endorsement unless specified. By using this site, you agree to the Privacy Policy and Terms & Conditions.

Navigate Site

  • Home
  • Electric Equipments
  • Electric Vehicle
  • Contact us

Newsletter Sign Up

No Result
View All Result
  • Home
  • Electric Equipments
  • Electric Vehicle
  • Contact us

© 2022 Electric News Hubb All rights reserved.