Tesla reported a lower-than-expected gross margin for the first quarter of 2023 as a series of aggressive price cuts aimed at spurring demand in a sagging economy and fending off rising competition took their toll. As a result, the company's total gross margin stood at 19.3%, compared to analysts' expectations of 22.4%, marking the lowest level since Q4 2020.
Multiple price cuts in the U.S., China, and other markets impact profitability.
Tesla has slashed prices several times in the United States, China, and other markets since late 2022 to drive volume growth amid an economic recession. Tesla has implemented six price cuts in the U.S. alone this year, which has affected its automotive gross margin. Price cuts have also been extended to Singapore, Israel, and Europe.
Despite the challenges, Tesla remains optimistic about its long-term prospects. The company reiterated its target of delivering around 1.8 million vehicles in 2023 and highlighted its ongoing investments in battery factories and efforts to normalize raw material and logistics costs. Tesla also expects its operating margin to remain the highest among volume original equipment manufacturers.
Tesla's automotive gross margins, a key figure for investors and analysts, dropped significantly. For Q1 2023, analysts had expected the company to report an auto gross margin of 23.2%, down from a record 32.9% a year earlier and the lowest since Q4 2019.
Company Focused on Long-Term Growth
Tesla's Q1 revenue reached $23.33 billion, slightly missing the consensus estimate of $23.35 billion. Adjusted net income stood at $2.9 billion, lower than the estimated $3.03 billion and considerably less than the previous quarter's figures and those from the same period last year. This trend indicates potential margin compression for the company.
Despite the challenges, Tesla remains committed to increasing production and maintaining a 50% long-term delivery growth rate. The company also confirmed that Cybertruck production is on track to begin later this year at its Gigafactory in Austin, Texas.
With numerous market price cuts and an uncertain economic landscape, Tesla's strategy to boost demand and grow market share comes under scrutiny. As the EV market grows more competitive, Tesla's ability to balance profitability and expansion will be crucial to maintaining its industry-leading position.
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Tesla’s Santa Mode is one of the earliest Tesla Easter Eggs, and with the 2024 Holiday Update, the Cybertruck gets its own customized version of Santa Mode. While Santa Mode already has its own set of unique assets and animations, Tesla’s team went all out with the special Cybertruck version.
Cybersled
When you enable Santa Mode on the Cybertruck, you won’t get the classic-looking Tesla sleigh with Santa behind the reigns.
Instead, Santa’s been replaced by Santa Optimus, who’s doing all the chores from now on. Optimus is steering the Cybersled, and his trusty steeds, this time, are Cyber Reindeer with their own slick-looking goggles. The Cybersled has also been upgraded with some fancy levitating technology.
Turn Signals
While the reindeer’s harnesses will light up when you turn on your turn signal, Tesla also added a unique feature to the Cybertruck version. When you turn on your blinker, Optimus will actually stick out his arm and look in that direction. It’s a nice little touch that makes the whole thing come to life. You can check it out in the video below:
In the Cybertruck Holiday update Optimus will turn its head and point left or right with its hands when you initiate a turn signal. Cool little details @Teslapic.twitter.com/ntxMFXjBtK
Cybertruck’s Santa Mode otherwise has all the features of regular Santa Mode on other vehicles, including snowy roads and falling snow. The assets for people and other vehicles are also the same, with them being replaced by elves and reindeer, respectively.
Santa Mode Lighting
The Cybertruck, just like the 2024+ Model 3, features ambient lighting on the interior. When you activate Santa Mode, your Cybertruck’s ambient lighting will cycle between Red, Green, and White, fitting the Christmas theme quite well.
How to Activate It
Santa Mode can be activated year-round and isn’t limited to the holiday season. You can activate it via the Toybox menu or using a voice command.
Voice Commands
The first voice command is “Ho Ho Ho”. Just simply say that - and the Run Rudolph Run song will chime on for a single cycle, and you can go spread some Cyber Christmas Cheer.
The second voice command is “Ho Ho Ho, not funny.” That one is a variation of Santa Mode, and Grandma Got Run Over by a Reindeer will be played instead.
ToyBox
The third way to activate Santa Mode is to head over to the ToyBox app in your Tesla. You can then tap on the Santa Mode panel and turn it on by enabling ‘Jingle All the Way.’ That’s the equivalent of running the “Ho Ho Ho” voice command, so you’ll hear Run Rudolph Run cycle through once upon touching the button. Unfortunately, it’s rather loud, and you can’t control the volume, so you’ll need to wait for it to finish playing or turn off Santa Mode completely.
Spread Cheer
You can also spread some cheer with your Cybertruck. You’ll need to be in Park before enabling this option. It will play the Santa Mode music you’ve selected through the vehicle’s external speaker known as the Pedestrian Warning Speaker (PWS). You’ll need to toggle on Spread Cheer before enabling Santa Mode, as the song stops after its first cycle. Due to updated NHTSA regulations, Spread Cheer no longer works while driving.
If you’d like to see all the features of Santa Mode on other Teslas, be sure to check out our regular Santa Mode guide.
Tesla has been working hard behind the scenes to get its Robotaxi network off the ground. We previously reported that they were in talks with the City of Palo Alto in California. This, combined with potential federal changes from the incoming U.S. Administration means that Tesla is really pushing to make its Robotaxi network a reality in 2025.
Bloomberg now reports that Tesla is in discussions with another city to explore the launch of an autonomous vehicle fleet. This development follows the major announcements made during Tesla’s We, Robot autonomy event in October.
Tesla has been testing the network in San Francisco's Bay Area with its employees and safety drivers, which means that internally, some of the necessary infrastructure is already in place to begin further deployments.
Austin, Texas
Bloomberg reports that Tesla is now in the early stages of the proposal with the city of Austin - the same city that already hosts Giga Texas. Tesla has apparently been in touch with the city’s Autonomous Vehicle Task Force since early spring to work on hashing out the proposal.
Austin already has Waymo and Zoox testing their robotaxi services in the city, so Tesla’s Cybercabs or other Tesla vehicles will be an interesting addition to the offerings already available.
The Proposal
The proposal will likely look at safety regulations, initial offerings by Tesla, liability status, and pilot testing the Robotaxi network throughout Austin before it is publicly rolled out. Another topic of discussion was ensuring that the city’s first responders - Firefighters, Paramedics, and Police - would be trained to interact with the vehicles. Tesla held an event in Austin with first responders on December 5th to do the initial set of training and help establish guidelines for the rollout.
We’re excited to see which of the two cities we know about - Austin or Palo Alto - will take the crown for the first public Robotaxi network.
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