Tesla Q1 Earnings: What you need to know
- Tesla released Q1 earnings that missed Wall Street consensus.
- Revenue was notable in that it missed consensus by nearly $1 billion.
- CEO Elon Musk is dealing with downturn in customer demand.
- Free cash flow improved markedly from a year ago.
As soon as the closing bell rang on Tuesday, Tesla (TSLA) was out with its first-quarter results. They were nearly as bad as expected, but the TSLA share price disregarded the miss, rising more than 5%.
After dropping 3.5% on Monday and falling 14% last week, this is the first instance of Tesla truly clawing back from its recent weakness. The NASDAQ rose 1.6% on Tuesday, and the S&P 500 gained 1.2% as earnings season added excitement.
Tesla earnings news
The king of electric vehicles (EVs) earned $0.45 in adjusted earnings per share (EPS), or non-GAAP earnings, which was 5 cents beneath the average analyst estimate.
Likewise, revenue of $21.31 billion missed the consensus estimate by $950 million. Sales fell nearly 9% from a year earlier due largely to falling demand from the retail crowd.
This news was already telegraphed somewhat as CEO Elon Musk announced layoffs last week that would affect 10% of workers at the company. Additionally, major price cuts reached several markets and affected multiple models.
However, free cash flow surged conspicuously to $2.53 billion from just $441 million a year ago. About $700 million of that went was added to the expanded capex budget as the company works out both the Cybertruck and Semi models.
EV stocks FAQs
Electric vehicles or EVs are automobiles that use rechargable batteries and electric motors to accelerate rather than internal combustion engines (ICEs). They have been around for more that 100 years, but battery technology research & development was meager for much of the 20th century. Lithium-ion battery technology became advanced enough to produce EVs at scale in the late 1990s and 2000s, and sales have been steadily increasing since then Tesla’s Roadster was unveiled in 2008. EVs are viewed as a means of reducing carbon emissions since battery electric vehicles (BEVs) themselves produce zero emissions. Other vehicles called plug-in hybrid electric vehicles (PHEVs) utilize both battery electric power and ICEs as a backup.
EVs are growing from a small base, but they rose from 9% of global new auto sales in 2021 to 14% of the total in 2022. This was a 65% YoY growth rate, and the industry delivered 10.2 million EVs worldwide in 2022. Projections show this number climbing above 16 million in 2023. Across the world, market shares differ greatly among nations. Nearly 88% of Norwegian new car sales in 2022 were EVs. On the other hand, the United States, where much of the modern innovation in EVs was forged, had less than 8% of new vehicle sales go to EVs in 2022. The largest EV market in the world, China, saw 30% of the market go to EVs that year.
We know you’re thinking Elon Musk, but he’s probably more like the father of the mass-market, contemporary EV. All the way back in 1827, a Hungarian priest named Anyos Jedlik invented the electric motor and used it the following year to power a vehicle of sorts. French scientist Gaston Planté invented the lead-acid battery in 1859, and German engineer Andreas Flocken built the first true electric car for the public in 1888. EVs made up about 38% of all vehicles sold in the US around 1900. They began losing market share rapidly after 1910 when gasoline-powered vehicles grew much more affordable. They largely died off until new research programs in the 1990s led to gradual private sector investment in the 2000s.
China’s BYD is by far the largest manufacturer of EVs in the world. In 2022 it sold 1.8 million EVs and in the second half of the year made up 20% of the global market. The asterisk given to BYD is that the vast majority of these vehicles are hybrids. Tesla’s 12% market share is often treated as more significant than BYD, because it only sells BEVs and is the most famous EV brand in the world. Volkswagen, BMW and Wuling then round out the top five. As a new sector with heavy investment though, many startups have flooded the market. These include China’s Nio, Li Auto and Xpeng; a Swedish-Chinese manufacturer called Polestar; and Lucid and Rivian from the US.
Tesla 4-hour chart
TSLA 4-hour stock chart
Author
Clay Webster
FXStreet
Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.
