tesla (TSLA 1.34%) Electric vehicle sales are about to have a record year. The company will deliver 1.8 million vehicles in 2023, including 1.2 million Model Y vehicles, which became the best-selling vehicle worldwide.
Tesla made headlines throughout the year for lowering prices to stimulate demand as consumers suffered from the pressures of high inflation and rising interest rates. The company reduced the listed prices of electric vehicles by an average of 25.1% from December 2022 to December 2023.
It had a huge impact on the company's bottom line. So, how much of Tesla's $78.5 billion in car sales in 2023 was profit?
Tesla's profits fell for the first time since 2017
In 2023, it cost Tesla $65.1 billion to manufacture and sell $78.5 billion worth of electric cars, giving the company a gross profit of $13.4 billion.
By comparison, in 2022, it cost Tesla $49.6 billion to manufacture and sell $67.2 billion worth of electric cars, resulting in a gross profit of $17.6 billion. This corresponds to a gross profit margin of 26.2%, which will decline to 17.1% in 2023, highlighting the impact of Tesla's price cuts.
In the end, Tesla's company-wide earnings per share, which includes financial results from its solar power, storage and services businesses, was $3.12. This is a 23% decrease compared to 2022 results, marking the first time since 2017 that the company's annual profit has declined.
As Tesla's price declines continue into early 2024, Wall Street analysts expect Tesla's profits could decline again this year. Tesla stock is down 54% from its all-time high as falling profits forced investors to reconsider the company's valuation, which could be difficult to recover in the short term. be.
But there's something interesting to consider here. In the long run, the bulk of Tesla's profits may not come from car sales, according to Cathie Wood's Ark Investment Management. Instead, it could come from the company's autonomous self-driving software.
