Tesla Q2 2023 earnings expectations: Cybertruck news and price cut effects

Tesla will announce its second-quarter earnings Wednesday after the bell. Investors will be listening out for more details on the much-delayed Cybertruck, as well as how Tesla’s many price cuts have affected automotive gross margins. 

Wall Street estimates predict Tesla will bring in around $24.9 billion in revenue for the quarter, which is nearly 50% higher than year-ago sales of $16.9 billion. 

Tesla’s stock has shot up 168.62% since the start of the year. It closed at $290.38 Monday afternoon, riding the high of the news that the first Cybertruck was finally built over the weekend. 

There’s much we still don’t know about the Cybertruck

Over the weekend, Tesla tweeted that it had finally gotten its first Cybertruck off the production line at Giga Austin, news that caused equal parts fanfare and skepticism. 

The skepticism is because Tesla shared no other details about the truck or its production schedule. The futuristic, angular, stainless-steel-bodied pickup truck was first announced in 2019, with production and deliveries expected to start in 2021. Tesla has repeatedly pushed back production, citing component shortages. 

In the aftermath of the news that Tesla had built a grand total of one Cybertruck, some have accused the automaker of trying to create hype, boost its stock price and distract from other issues by sharing the news so close to earnings. 

A few tidbits we’ll be listening for Wednesday: How Tesla will price the Cybertruck, what other specs the company can share on the vehicle, when first deliveries will begin and when the automaker will hit mass production.

We also want to know what Tesla’s production capacity will be for the Cybertruck. At Tesla’s 2023 annual shareholder meeting in May, Musk said the automaker could deliver between 250,000 to 500,000 units per year once production begins. Let’s see if Tesla narrows that number down tomorrow.

How price cuts have affected auto gross margins

Analysts from Wells Fargo and Wedbush both predicted Tesla’s auto gross margins would fall to 17.5% in the aftermath of the automaker’s continued price cuts across the U.S., Europe and China.  

The price cuts, as well as the U.S.’s federal EV tax credits, have appeared to boost Tesla’s sales in the last two quarters. In Q2, Tesla hit record global production and deliveries of 479,999 units and 466,140 units, respectively. That’s up 10% quarter-over-quarter and 83% year-over-year. 

While those discounts may have increased sales, they may also have affected margins, as they did in the first quarter.

In Q1, gross margins fell below 20%, squeezing the automaker’s traditionally robust automotive revenue. Operating margins, an area where Tesla has been an industry leader, also fell from 19.2% in Q1 2022 to 11.4% in Q1 2023. The company’s net income of $2.51 billion in the first quarter was a 24% drop from the same period last year. 

Some of these losses can be attributed to vehicle discounts, and some to increased production. In Q1, Tesla spent $2 billion on capital expenditures, likely as it shores up capacity at its new and existing plants. 

Analysts appear to be split on whether to worry about Tesla’s stock price or not. Some say Tesla is overhyped, and increased competition will soon take market share away from the automaker.

Others believe the company’s strategy of pushing for higher volumes at lower margins may pay off in the future, particularly if Full Self-Driving (FSD), Tesla’s advanced driver assistance system (ADAS) offering, improves and takes hold in the future. Tesla bulls generally see the company as more than an automaker — they say Tesla is anything from an AI company to a sustainable energy conglomerate. 

Updates on Supercharging

Over the past quarter, a number of automakers and charging companies have said they would build cars and charging stations with Tesla’s NACS standard. While we won’t expect to see much revenue from non-Tesla EVs using the automaker’s network of Superchargers just yet, we might hear some updates from the company on plans to build a larger network or expectations for revenue growth in that area.