Muskspeak on Cybertruck, Price Cuts, FSD Timing as Tesla Hits New Records in Q2

  • The US remains the top market for Tesla followed by China and Europe.
  • Aiming to develop an in-house AI ecosystem, Tesla has started building its own Dojo training supercomputer.
  • With this growth trajectory, Tesla is expected to achieve sales of around 1.9 million units by the end of 2023.

Tesla achieved remarkable results in Q2 2023, with its revenue growing 47% YoY to reach the record-breaking figure of nearly $25 billion. The company’s vehicle deliveries too hit a record at 466,915, growing 83% YoY. The US retained its position as Tesla’s largest market, contributing to 37.6% of the total sales, while China and Europe followed closely behind. Global price cuts for the Model Y and Model 3, along with tax subsidies in the US and China, were two of the biggest drivers for Tesla’s Q2 sales.

Tesla CEO Elon Musk, during the earnings call, discussed a few key things like the long-awaited Cybertruck deliveries, Tesla’s advantage in competitive pricing of vehicles and the possibilities of attaining complete FSD:

Cybertruck delivery outlook

CEO:  “Demand is so – so far, off the hook, you can’t even see the hook. So, that’s really not an issue. I do want to emphasize that the Cybertruck has a lot of new technology in it. Like a lot… So, always very difficult to predict the – the ramp initially, but I think we’ll be making them in high volume next year, and we will be delivering the car this year.”

Soumen Mandal’s analyst take: “Musk is certainly hyping the Cybertruck, not that it needs to anymore, but there is also significant expectation setting with discussions on internal production and supply chain hurdles. Is this another Model Y? That’s a tough act to follow, but the Cybertruck does bring a slew of unique parts and processes. So, longer term, we expect to see another products flywheel off from it.

Tesla’s price cuts for its vehicles

CEO:  “And we, you know — we just — we just course according to what the mood of the of the public is, you know. Buying a new car is a — it’s a big decision for vast majority of people. So, you know, anytime there’s economic uncertainty, people generally pause on new car buying, at least to see to see what happens.

And, you know — and then, obviously, another challenge is the — the interest rate environment. As interest rates rise, the affordability of anything bought with that decreases, so effectively increasing the price of the car. So, when interest rates rise dramatically, we actually have to reduce the price of the car because the — the interest payments increase the price of the car. So — and this is at least — at least up until recently was to believe the sharpest interest rate rise in history. So, we had to do something about that. And if someone’s got a crystal ball for the global economy, I really appreciate it. If I could borrow that crystal ball.”

Soumen Mandal’s analyst take: “Tesla’s strong supply chain and reduced cost of production due to low raw material cost, especially for lithium, has encouraged the company to reduce prices of its vehicles. Alongside what Musk described as ‘interest rate rises’, Tesla’s price reduction has made all variants of the Model 3 and Model Y eligible for IRA tax credit in the US, where it will benefit in the long term. So, macroeconomic policies and geopolitical relations play a crucial role in deciding such price reductions, incentives or discounts.”

Autonomy (FSD): Timing

CEO:…the reason I’ve been optimistic [on achieving full self-driving] is what it tends to look like is the — we’ll make rapid progress with the new version of — of FSD. But — but then, it will curve over logarithmically. So — so, at first, like, a logarithmic curve looks like, you know, just sort of fairly straight upward line, diagonally up. And so, if you extrapolate that, then you — you have a great thing. But then because it’s actually logarithmic, it curves over. And then, there have been a series of logarithmic curves. Now, I know I’m the boy who cried FSD, but man, I think — I think we’ll be better than human by the end of this year.”

Abhik Mukherjee’s analyst take: “Almost every auto OEMs are spending on autonomy. Tesla is also walking in the same direction and is building an in-house AI service that includes in-house real-time data sets, neural Net training, vehicle hardware and software. Tesla is expecting to reach perfect FSD soon and for this, it is also building a Dojo supercomputer. Early development of FSD will give Tesla a massive first-mover advantage over its competitors. We assume Tesla FSD might also get adopted by other automakers, like Tesla NACS is being adopted.”

Autonomy (FSD): Disruption

CEO:  “It’s not about getting more share. It’s just that you can think of every car that we — that we sell or produce that — that — that has a full Autonomy capability as actually something that, in the future, may be worth as much as five times what it is today…If you’ve got an autonomous — if that vehicle is able to operate autonomously and — and use — be used in either dedicated or autonomous or partially autonomous like — like, Airbnb, like maybe sometimes you allow your car to be used by others, sometimes you want to use it exclusively, just like, you know, Airbnb, you know, doing Airbnb with a room in your house… So, I think it’s sort of it would be — I think it — it does make sense to sacrifice margins in favor of making more vehicles because we think, in the not-too-distant future, they will have a dramatic valuation increase. I think the Tesla fleet value increase to the point at which we can upload full self — you know, full self-driving and it’s approved by regulators, will be the single biggest step change in asset value maybe in history.”

Abhik Mukherjee’s analyst take: “Although we are excited about autonomous vehicles, Tesla currently is a bit far from achieving perfect FSD. Incidents involving Tesla vehicles are frequently reported. Currently, Tesla FSD is only available in the US and it will need a lot of approvals from regulators to ensure 100% safety before it can be rolled out to other regions, especially in Europe where regulations are much stricter. Though achieving complete FSD could disrupt the market in future, currently Tesla must work to make its FSD software incident-free.”

Tesla Q2 2023 revenue by segment

Financial highlights

  • In the automotive segment, Tesla achieved revenue of $21.26 billion, an annual growth of 7%. Around 4% of this revenue was derived from sales of regulatory credits and automotive leasing.
  • In addition to the automotive segment, Tesla experienced significant growth in its other businesses, such as energy generation and services, with revenues surging by 57% YoY to reach $3.65 billion in Q2 2023. Tesla deployed 7 GWh of energy storage and 66 MWh of solar panels during the quarter.
  • Tesla achieved a gross profit of $4.53 billion, a 7.1% YoY increase. High vehicle deliveries, low cost of production due to lower raw material costs and IRA tax credits for EVs in the US contributed to this result. But the low ASP of vehicles due to the voluntary global price cuts also hurt Q2 profitability.
  • Tesla’s Q2 operating profit was 62%, a decline of 1.8 percentage points sequentially. The reduction can be attributed primarily to the significant expenses incurred in ramping up the production for Cybertruck, Tesla’s in-house 4680 cells and the development of AI through its Dojo training computer. Other additional costs were associated with a new ‘Get to Know Your Tesla’ UI and facelifts for the Model 3 and Model Y.

Tesla Q2 2023 production and deliveries


With the current growth trajectory, we expect Tesla deliveries will reach around 1.9 million by the end of 2023. Its robust supply chain and vertically integrated production have given Tesla a competitive advantage.

Other growth opportunities are arising from the adoption of Tesla’s NACS charging standard by several OEMs including Ford, GM, Rivian, Volvo, Polestar and Nissan for the North American market. This allows these auto companies to leverage Tesla’s extensive network of charging stations across North America, enhancing the convenience and accessibility of electric vehicle charging for their customers. But it also gives Tesla the option to increase its revenue by charging licensing fees from OEMs adopting its proprietary NACS ports.

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Price Cuts Boost Tesla Revenue in Q1, Profit Slumps Compared to 2022

  • 2 million vehicle deliveries are achievable in 2023 if the macroeconomic situation doesn’t worsen.
  • Gross profit was down 17% YoY to $4.5 billion due to price cuts, raw material inflation, exchange rate impacts and other factors.
  • 3.9 GWh of energy storage was shipped during Q1 2023, Tesla’s highest yet.

Tesla’s Q1 2023 deliveries stood at 422,875 vehicles globally and registered a total revenue of $23.3 billion, a YoY increase of almost 25%. With Tesla announcing price cuts for its models starting from January, vehicle deliveries also saw a 36% YoY boost. Tesla’s sales increased significantly across the US and China, accounting for 40% and 33% of its global deliveries, respectively. Almost 98% of Tesla’s sales came from the Model Y and Model 3. During Q1, the Model Y became the best-selling car in Europe and the best-selling non-pickup vehicle in the US. The Model 3’s sales also increased significantly in Europe, with almost 29,000 of them being sold in the continent during Q1. As the Berlin factory only produces the Model Y, all the Model 3s sold in Europe were imported from China.Tesla Revenue Q1 23_Counterpoint Research

Financial highlights

  • Revenue from Tesla’s automotive segment stood at nearly $20 billion, an 18% YoY increase. Automotive sales accounted for almost 95% of the revenue but revenue from the sale of regulatory credits and vehicle leasing declined significantly.
  • Tesla’s revenue from other business lines, such as energy deployment and services, increased by 78% YoY to $3.3 billion. During Q1, Tesla deployed a record Megapack storage, totaling 3.9 GWh and growing 360% YoY, the highest in a single quarter.
  • Automotive quarterly reportAlthough Tesla generated strong revenue in Q1, gross profit declined by 17% YoY to $4.5 billion and net profit declined by 23% to $2.5 billion. High vehicle deliveries and growth in other business lines helped the revenue, but the lowered vehicle ASPs, high raw material costs due to inflation, increased logistics costs, costs associated with the ramping up of the 4680-cell production, lower-than-expected utilization of the Berlin factory and negative exchange rate impacts all played a role in the lowered profits compared to a year ago.
  • Tesla’s Q1 operating profit was 11.42%, a decline of 4.6% sequentially. Tesla claims to have a better position than its competitors who are still struggling through the challenges of reducing EV unit costs. Tesla aims to leverage its position as a cost leader, which it has achieved through increased penetration of in-house designed controllers, batteries and drive units.
  • Q1 R&D expenses were $771 million, 3.3% of total revenue. Tesla is developing a 360-degree ecosystem – Tesla OS. This will help the company reduce dependency on third-party software and cloud subscriptions for its day-to-day work, besides helping in the vertical integration of software-based services and better cost control.

Tesla Production and Deliveries Q1 23 Counterpoint Research


Tesla’s strong position in the auto market has also helped its market outlook. Price cuts have made Tesla’s vehicles more affordable and with its Model Y and Model 3 becoming eligible for the tax credit subsidy in the US, we expect Tesla to capture over 50% of the country’s EV market. In its earnings call, Tesla also signaled more price cuts. It also plans to open another factory in Shanghai to focus on the production of cells and batteries as part of its 100-GW cell factory capacity announced last year.

Tesla expects to start deliveries of its long-awaited Cybertruck in Q3 2023. The company is also working on its next-generation vehicle platform.

With a strong start, Tesla aims for 1.8 million global deliveries during 2023, but 2 million is achievable if the macroeconomic situation does not deteriorate significantly.

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Tesla Reports Record Revenue, Deliveries in Q4 2022

  • Tesla’s total revenue stood at $24.3 billion in Q4 2022 with 37% YoY growth.
  • Tesla deployed 2.46 GWh of energy storage during Q4, a growth of almost 152% YoY.
  • Tesla’s vehicle deliveries are expected to exceed 1.7 million units globally in 2023.

Riding on record 405,278 vehicle deliveries in Q4 2022, Tesla registered a record total revenue of $24.3 billion during the quarter, an increase of 37% YoY. Deliveries rose 31.3% YoY in Q4, bringing the 2022 annual total to 1.3 million units. The US was the leading market in Q4, followed by China and Europe. The annual deliveries of Tesla’s premium Model X and Model S grew 167% YoY to reach 66,000 units.

Tesla’s sales in China fell short of expectations again due to the COVID-19 outbreak. Production at the Shanghai factory, which exported more than 106,000 units in Q4, was halted during the last week of December. Although no specific reason was stated officially, rising COVID-19 cases among workers were a likely cause for the unexpected production halt. On the other hand, the weekly Model Y production in the Berlin factory touched 3,000 units. The rising production in Germany has helped Tesla gain a strong grip on Europe’s EV market. The Model Y remained Europe’s top-selling car model during November and December. Tesla’s in-house 4680 cell production rate also reached 1,000 cars per week.

Tesla Revenue by segment Q4 2021 - Q4 2022 Counterpoint Research

Financial summary

  • Tesla’s total revenue during Q4 2022 stood at $24.3 billion, an increase of 37% YoY. The company generated more than $20 billion from automotive sales. During Q4, the widespread release of Tesla’s full self-driving (FSD) feature generated $0.32 billion in revenue, indicating that the company is striving to increase the proportion of software revenue in its overall product mix.
  • Revenue from Tesla’s other businesses like energy storage, solar panel deployment, charging and vehicle servicing grew by almost 72% YoY to exceed $3 billion. Other businesses contributed 12% of Tesla’s Q4 revenue.
  • Tesla deployed 2.46 GWh of energy storage during Q4. At 151.7%, it saw the highest YoY growth till now.
  • Tesla’s total revenue for 2022 exceeded $81.4 billion, a 51% YoY growth.
  • During Q4, gross profit also increased by 19% YoY and stood at $5.7 billion. In October, Tesla reduced vehicle prices in China after increasing them a couple of times during H1 2022. Initially, it was thought the increase in demand would make up for the price cut but the negative foreign exchange impact restricted further gross profit growth.
  • Tesla’s inventory in Q4 stood at 34,423 units, bringing the annual total to 55,760 units. The COVID-19 outbreak in China and the increased production in the Berlin factory are probable causes of the higher inventory. In addition, Tesla is facing stiff competition as legacy automakers and new players are offering more affordable EVs. In January 2023, Tesla lowered prices globally, which may help in clearing out inventories and achieving economies of scale.

Tesla production and deliveries, Q4 2021-Q4 2022 Counterpoint Research


Tesla’s strong fundamentals are expected to keep the company ahead of most other electric vehicle brands globally. Tesla announced price cuts in January 2023, which has resulted in the demand ballooning to twice the production. Besides, pilot production of the Tesla Semi began in 2022 and the vehicle is expected to hit the road soon. The company also plans to start production of the Cybertruck in mid-2023. Furthermore, Tesla recently announced an investment of $3.6 billion to set up a 100GW capacity cell factory and a high-volume semi factory. Tesla’s 2023 vehicle deliveries are projected to exceed 1.7 million units, with a 31% YoY growth. This seems attainable if the company’s recent price cuts remain in effect for most of the year.

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Tesla’s Chinese Foray: Why, What and How

In 2018, Tesla CEO Elon Musk signed an agreement with the Shanghai regional government to set up the first Gigafactory in China. Here we discuss why Tesla decided to enter China, the competitive advantage it has over other local players and how Tesla’s entry in China will impact the domestic electric vehicle (EV) market.

Why China?

China is among the largest automobile markets in the world with annual vehicle sales of around 25 million. Long-term growth potential and supportive government policies for EVs make China an attractive market for Tesla.

  • China is the largest EV market in the world, accounting for 1.1 million EV sales, out of the 2.2 million sold globally in 2019.
  • EVs have strong government support in China. It aims to increase the penetration of EVs to 25% by 2025. Since 2012, the government has supported EV adoption through billions of dollars in subsidies. These subsidies have since been progressively reduced. From 2019 onwards, automakers are required to sell a specific number of EVs annually to earn tradable EV credits.

Counterpoint: Tesla in China market competition

Competitive advantages

  • Like Apple in smartphones, Tesla enjoys a strong brand image in the minds of Chinese car buyers. Tesla cars are perceived to be of better quality, better designed, offering a high range and relatively long-lasting when compared to other EV
  • Tesla is technologically advanced compared to local EV Examples of Tesla’s advanced technology include:
    • Autopilot: Tesla’s autonomous platform is considered among the most advanced in the world.
    • OTA updates: The company uses over-the-air (OTA) software updates for maintenance and adding/loading new features.
    • Battery: Focus on improving battery technology, range and efficiency. The new LFP battery lasts a million miles.
    • Infotainment and connected services: Software update V10 provides advanced infotainment features like video and music streaming, and karaoke. It also includes a Smart Summon, or smart parking, feature.
  • There are more than a million Tesla cars on the road globally. The company has the advantage of collecting feedback and data from these cars and improve its current software like Autopilot and Smart Summon. Not many automakers have sold so many EVs till now or have enough focus on autonomous cars/technology updates.

Shanghai factory

The key advantage of owning a factory in China is the cost savings associated with local sourcing and production. Utilizing parts manufactured by Chinese suppliers, rather than importing them from the US and paying additional tariffs, brings down the production cost. Around 30% of parts used in the China facility are sourced locally and Tesla plans to increase it to 100% in 2020.

Recently, Tesla reduced the price of Model 3 to avail government subsidies and remain competitive. Lowered costs due to localization and falling battery prices could encourage Tesla for further price reductions.

 Impact on Chinese EV market

  • Domestic Chinese companies will continue to dominate the New Energy Vehicle (NEV) category as a vast majority of cars sold in the country cost less than $45,000, a price segment where Tesla does not compete. The share of expensive EVs (>$45,000) is limited in China.
  • Start-ups like Nio and Byton, which focus on high-end EVs, will be most impacted by Tesla. These start-ups are already struggling to make sales and profits. Tesla is expected to give them competition with its global experience and expertise in EVs, batteries and technology.
  • The price of Tesla Model 3 is expected to decline due to falling battery prices and localization. Automakers (especially premium EVs) would need to upgrade in terms of battery, build and technology to stay competitive.
  • Increasing pressure to upgrade product quality will benefit the overall Chinese market. Despite many local Chinese brands in the conventional car market, international brands like General Motors and Volkswagen (with JVs) account for the majority of sales in the country. Chinese government restricted the entry of (standalone) foreign players, which impacted the overall evolution of domestic automakers. Companies like Tesla will change this and promote competition, forcing domestic EV companies to innovate.


Tesla sales will see significant growth in China due to the above-mentioned advantages. However, the current growth rate in sales comes from a low base and increasing competition is expected to slow it in the long term. New models like Model Y (possibly Cybertruck) will benefit sales in the mid-term.

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