Elon Musk, CEO of Tesla, has stated that the company is willing to prioritize higher vehicle volume over short-term profit margins. Despite missing first-quarter expectations for total gross margin, Musk emphasized Tesla’s commitment to price cuts and increasing vehicle fleet size. He highlighted that while the company reduced prices considerably, its operating margins remain among the healthiest in the industry. Tesla reported a total gross margin of 19%, falling short of the estimated 22%. The company’s net income dropped 24% to $2.5 billion in the latest period.
Musk also discussed Tesla’s software and hardware combination, expressing confidence in achieving vehicle autonomy in the near future. Tesla currently offers a driver-assistance software named Full Self Driving, though the vehicles still require human drivers to be in control.
The EV maker reported global deliveries of 422,875 vehicles in the first quarter, a modest increase of 4.3% from the previous quarter. Musk stated that global production should reach between 1.8 million and 2 million vehicles this year, compared to about 1.4 million vehicles produced in 2022.
Tesla’s upcoming Cybertruck was also mentioned, with Musk revealing that the electric pickup truck is expected to have a delivery event in the third quarter of the year. He highlighted the high demand for the Cybertruck and the company’s efforts to prepare its Texas factory for production.
Despite the missed margin estimates and increased price cuts, analysts suggest that Tesla’s strategy could boost vehicle volume in the short term but might raise concerns about maintaining brand prestige in the long run.