Tesla's Q1 2023 Automotive Gross Margin Will Surprise Everyone
Tesla's Q1 2023 automotive gross margin will be higher than expected due to ramping up of Austin and Berlin production, lower cost of production, excitement over Autopilot and FSD beta, moderating inflation, and falling prices of key battery materials.
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Tesla’s Q1 2023 automotive gross margin will surprise everyone
— Whole Mars Catalog (@WholeMarsBlog) April 4, 2023 -
With Austin and Berlin ramping, they will go from being a drag on gross margins to actually having higher than average margins
— Whole Mars Catalog (@WholeMarsBlog) April 4, 2023
the large structural castings which are much lower cost to produce despite higher ASPs will become a more material part of the mix -
excitement over autopilot & fsd beta will drive software sales and boost take rates, after sale upgrades, and subscriptions
— Whole Mars Catalog (@WholeMarsBlog) April 4, 2023 -
inflation is moderating. the prices of key battery materials are falling
— Whole Mars Catalog (@WholeMarsBlog) April 4, 2023 -
in addition, the vehicles have been redesigned to be lower cost, with changes like the removal of the 12 ultrasonic sensors.
— Whole Mars Catalog (@WholeMarsBlog) April 4, 2023 -
as all of the growth in production is Model Y, this should improve the mix of Model Y vs Model 3 and boost average selling prices, which will be accretive to gross margins
— Whole Mars Catalog (@WholeMarsBlog) April 4, 2023 -
Notice that the Model Y price cut was so much bigger than the Model 3. This was driven by ramp efficiencies. Profitability improves dramatically as scale increases
— Whole Mars Catalog (@WholeMarsBlog) April 4, 2023 -
All things considered, we should see health automotive gross margin between 20% - 25% despite the Q1 price cuts
— Whole Mars Catalog (@WholeMarsBlog) April 4, 2023
This could actually grow through the year, not shrink as the above factors continue to play out