Elon Musk believes autonomy and high-volume low-margin sales are the keys to success for Tesla, the Wall Street isn’t convinced

-

-Advertisement-

During the Q1 2023 Tesla (TSLA) Earnings Call, the company’s Technoking and CEO Elon Musk openly spoke about the automaker’s future strategy to achieve profitability.

Talking to institutional investors and Wall Street journalists during the call, Elon Musk expressed that Tesla now aims to produce a high volume of cars on a lower profit margin. This is how the automaker intends to sell the maximum number of vehicles it can produce at its multiple Gigafactories around the globe.

With a substantial percentage of Tesla owners either buying or subscribing to Autopilot Full Self-Driving (FSD) in the future, Tesla expects to reap most of its margin on software rather than the car itself.

Tesla Accessories by EVANNEX.
– Sponsored –

Tesla dropping the price of its cars in Q1 2023 multiple times is part of this strategy — low margin and maximum sales.

Tesla’s Full Self-Driving is currently running in beta testing mode in the United States and Canada. Although its price has reached the highest ever with $15,000 for a lifetime and $199 as a monthly subscription fee.

As Tesla expanded FSD Beta to a wide user base in North America last year, the automaker saw a spike in its monthly subscribers who wanted to experience autonomous driving in their Tesla vehicles.

This trend must have acted as a precursor to the strategy that Elon Musk announced during his opening remarks of the Tesla Q1 2023 Earnings Call (listen to the recording below).

However, Musk pressed that despite the price drops during the first quarter, Tesla’s operating margins are still among the best in the automotive industry.

“While we reduced the prices considerably in early Q1, it’s worth knowing that our operating margin remains among the best in the industry,” Elon Musk said.

Tesla (TSLA) Q1 2023 financial summary (profits, margins, operating costs, etc.)
Tesla (TSLA) Q1 2023 financial summary (profits, margins, operating costs, etc.) Source: Tesla Investor Relations website / PDF.
– Advertisement –
Audio recording: Tesla (TSLA) Q1 2023 Earnings Call (Elon Musk, Zachari Kirkhorn, and the journalists’ questions).

“We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice here vs. a lower volume and higher margin,” he added.

“However, we expect our vehicles over time will be able to generate significant profit through autonomy (Autopilot/FSD),” Musk explained.

“So, we do believe we’re like laying the groundwork here and that it’s better to ship a large number of cars at a lower margin and subsequently harvest that margin in the future as we perfect autonomy, this is an extremely important point,” Elon Musk further said.

To Elon Musk, the long-term vision for Tesla has been the most important since the inception of the company. But Wall Street does not seem to be convinced this time, Tesla’s share price dropped by almost 10% (from $180.59 to $162.99) the next day after the Earnings Call took place on Wednesday, April 19, 2023.

Later on in the earnings call, Wall Street journalists kept asking the same question again and again, asking about the profitability of the next quarter and the short-term gains.

Of course, Elon Musk and his team aren’t going to commit themselves to a short-term vision and goals. A Wall Street Tesla (TSLA) investor, analyst, and YouTuber Rob Maurer discussed this in detail in the following video.

Stay tuned for constant Tesla updates, follow us on: 
Google News | Flipboard | RSS (Feedly).

Video: Rob Maurer talks about Elon Musk / Tesla’s (TSLA) future profitability strategies.

Related

Iqtidar Ali
Iqtidar Alihttp://www.teslaoracle.com
Iqtidar has been writing about Tesla, Elon Musk, and EVs for more than 3 years on XAutoWorld.com, many of his articles have been republished on CleanTechnica and InsideEVs, maintains a healthy relationship with the Tesla community across the Social Media sphere. You can reach him on Twitter @IqtidarAlii

Latest News

2023 Tesla Holiday Update (2023.44.25) release notes leak ahead of its public rollout

Just like last year, many of the Tesla Holiday Update features have been leaked ahead of its official rollout...

Cybertruck in Beast Mode beats a Porsche 911 in drag racing while pulling another one

"Dopamine on tap," is the slogan for Tesla's Cyberbeast (Cybertruck performance variant). The automaker guarantees a dopamine rush when...

Cybertruck’s range figures disappoint Tesla customers, even the range extender doesn’t match expectations

Tesla revealed the final features, specifications, and pricing of the Cybertruck at its Delivery Event on Thursday last week....

Watch how Tesla Cybertruck performs in a crash safety test against ICE pickup trucks

We didn't hear much about Tesla Cybertruck's safety from the company's CEO Elon Musk during the Delivery Event presentation...
- Advertisement -

Elon Musk’s iPhone wallpaper of Starship’s 2nd launch tells us a bit about his phone preferences

CEO of Tesla and SpaceX Elon Musk shared his personal phone's wallpaper on X (Twitter) a couple of days...

2nd Starship launch was a success, it went way beyond stage separation and then missing in space

After 7 months of excitement, hurdles, and wait, SpaceX finally launched Starship for the 2nd time. Although both Super...

SpaceX delays Starship launch to Saturday 18th Nov to fix a grid fin on the Super Heavy rocket, says Elon Musk

SpaceX CEO Elon Musk has announced on his social media platform X that the 2nd Starship launch which was...

Tesla Tips & Tricks

Calculating Tesla Model 3 range loss through a cold winter night (video)

As the holiday season is nearing, cold weather is...

Leaked photo of the Tesla Cybertruck bed reveals 3 power outlets of 110 and 220 volts

As close as we get to the Cybertruck Delivery...

Tesla Quarterly Reports & Eearnings

- Advertisement -

You might also likeRELATED
Recommended for You