Why did operating profit plummet in Q4 2023?

The operating profit of Tesla, Inc. (TSLA) experienced a significant decline in Q4 2023 compared to the previous year, which can be attributed to several key factors: 1. **Increased Costs**: Tesla faced higher costs related to scaling up production for new battery cells, the Cybertruck, and other large projects. These increased costs adversely impacted the company's profit margins. 2. **Price Reductions**: Tesla continued to reduce the average selling prices (ASPs) for its models, which had a significant impact on margins. Despite a 29% year-over-year increase in Model 3/Y deliveries, the overall revenue growth was only 9%, missing analyst estimates by $790 million. This decline in revenue growth can be attributed to the price cuts implemented by Tesla to boost affordability and deliveries. In summary, the operating profit decline in Q4 2023 was primarily due to increased production costs and price reductions, which together squeezed profit margins for the company.