Why did Tesla's net profit drop sharply in Q1 2024?

Tesla's net profit dropped sharply in Q1 2024 due to a combination of factors that impacted its profitability:

1. Revenue Decline: Although Tesla's total revenue increased to $21.3 billion, the growth rate was negative at -0.09% compared to the same period last year. This decline in revenue growth could be a result of various factors such as increased competition, market saturation, or pricing strategies.
2. Cost of Goods Sold and Operating Expenses: Tesla's cost of goods sold rose to $17.61 billion, and research and development expenses increased to $1.15 billion. These higher operational costs, coupled with a decrease in selling, general, and administrative expenses to $1.37 billion, suggest that Tesla is facing challenges in managing its production costs and administrative overheads.

TSLA Selling, General, and Administrative Expenses, Cost of Goods Sold...

单位

3. Price Cuts and Margins: Tesla has been implementing price cuts to stimulate sales, which has affected its profit margins. The company's gross profit margin dropped to 17%, down from nearly 30% in 2021. These price reductions, while necessary for maintaining demand, have inevitably impacted Tesla's net profit.
4. Market Conditions and Competition: High interest rates have made EVs less affordable, impacting demand and pricing power for Tesla. Additionally, increased competition in the EV market from other manufacturers has put pressure on Tesla's market share and pricing power.

In summary, Tesla's net profit drop in Q1 2024 is a result of a combination of revenue decline, increased costs, price cuts, and challenging market conditions.