With Tesla profits down, Musk dangles Cybertruck, FSD this year

Tesla is selling plenty of electric vehicles these days, thanks in large part to a string of heavy price cuts this year. But those sales haven't translated to higher profits, according to Tesla's Q1 2023 financial results. In fact, net income dropped 24 percent year on year. Earnings per share fell by nearly as much, down 23 percent to $0.73 per share.

The seemingly never-ending price cuts did not help, but they weren't the only cause. Tesla says that many of its costs--raw materials, commodities, logistics, and warranties--have gone up, and trying to increase production of its new 4680 lithium-ion battery cell has not been cheap. It's also making less money from selling regulatory credits--just $564 million this quarter compared to $679 million this time last year. Free cash flow fell 80 percent from Q1 2022 to $441 million.

It wasn't all bad news for the automaker. Its automotive revenues grew 18 percent compared to Q1 2022, and total revenue increased by 24 percent to $23.3 billion. It was a good quarter for Tesla's battery storage and solar operations. These grew revenue by 148 percent year on year, deploying 40 MW of photovoltaics and 3.9 TWh of energy storage--a 360 percent increase compared to the 846 GWh of batteries it shipped in Q1 2022.

The company's financials also show it's expanding its reach and building out more Supercharger locations. Tesla says it has 1,000 locations, although for this quarter, it notes it has changed the way it reports its physical footprint and that the "count now includes all sales, delivery, body shop, and service locations globally." And it's closing in on 5,000 Supercharger sites, with a total of 45,169 actual chargers in operation. (Based on data from the US Department of Energy, about 35 percent of those stations--1,735 in all--are in the US.)

Tesla CEO Elon Musk told investors on a call, "We've taken a view that pushing for higher volumes and a larger fleet is the right choice here, versus a lower volume and higher margin."

Real soon now

But the company has a couple of plans to pump those profits back up. One is its highly controversial "Full Self Driving" assistance system. Despite a string of recalls, Musk said that this year would see FSD emerge from beta status. Significantly, this would mean Tesla no longer has to defer the revenue brought in by customers paying for the feature, which currently costs $15,000.

Yet again, Musk claimed that the arrival of FSD would turn Teslas into appreciating assets. "We are making a car that, if autonomy pans out, that asset will be worth a hell of a lot more in the future than it is now," he said. (In fact, the value of a used Tesla has been falling, although a search on Autotrader this morning found very few under the $25,000 price cap for the used clean vehicle tax credit.)

There may be good news for fans of the company's angular, stainless-steel take on the pickup truck. First shown off in 2019, the highly unconventional vehicle has apparently now progressed into alpha status, Musk said. Now, we're told, the first Cybertruck customers should receive their vehicles in Q3 of this year.