Tesla Inc. (TSLA), a company that sells cars and pickup trucks across the globe, has rapidly grown to become one of the biggest all-electric car companies in the world. The company has even grown to be the most valuable in the auto industry by capitalization. Tesla, headquartered in Austin, is primarily a car company. Its revenue and profit are dominated by this segment.
Tesla is facing increasing competition from major automakers that are marketing and developing electric vehicles, including General Motors Co. GM (General Motors), Nio Inc. in China (NIO), and German-based Volkswagen AG (VOW3) and Mercedes-Benz Group AG.
What you need to know
- Tesla manufactures, sells and services electric vehicles in America, Europe and China. Also, it sells products for energy production.
- All of the company’s revenue comes from automobile sales.
- Tesla’s growth has been rapid in China.
- Tesla has faced investigations from regulators in different countries concerning safety-related issues with the electric automaker's vehicles.
- A California regulatory agency sued the company in February 2022 over allegations of racism and harassment in its Fremont factory.
Tesla Financials
Tesla revealed financial results of its fiscal year 2023 (FY), late in January 2024. The fiscal year of 2023 ended on December 31, 2023.
Net income attributable to the company's common shareholders rose 19.4% during the year to $14.99 billion. In the last year, revenue grew by 18.8% to reach $96.77 billion. Tesla measures profitability by its segments using gross profit, which decreased 15.3% from $17.66 to $96.77 billion.
As much as 46.7% of Tesla's revenue was generated within the U.S. in FY 2023, up 49.8% compared to FY 2022. China generates about 22,5% of the total revenue. Another 30.8% was generated by other countries around the globe.
Tesla, on the other hand, has stated that it’s vehicle deliveries have decreased by 5% during Q2 of 2024. The company wants to expand its production capacity as soon as possible. It's begun to ramp up production at its factories in Austin, TX, and Berlin while attempting to maximize output at its established factories in Fremont, CA, and Shanghai.
Tesla also faces ongoing challenges in its global supply chains, limiting the company’s ability to function at full capacity.
Tesla Segments
Tesla is divided into two segments, Automotive and Energy Storage and Generation. Each segment is provided with revenue and gross profits metrics.
Vehicles
Tesla's automotive segment includes the design, development, manufacturing, sales, and leasing of electric vehicles as well as the sale of automotive regulatory credits. Segment revenue accounts for approximately 94% and includes vehicle sales, non-warranty services after the sale, as well as retail merchandise.
Segment posted a profit of 16.52 billion dollars in FY 2023. This is down 19.7% from the prior year. The revenue rose by 17%, to $90.74 Billion.
Storage and generation of energy
Energy generation and storage represents 6.2% of the total revenue. The segment covers the manufacturing, distribution, leasing and sales of products for solar energy production and storage, along with related services. It also includes sales incentives. In FY 2023 the segment generated a profit of $1.1 million, which is a considerable increase from $288 million recorded in FY 2020.
Tesla Latest Developments
California Department of Fair Employment and Housing is a California regulator that sued Tesla on February 10, 2022 for allegations of racial harassment and discrimination. The allegation stated that the electric automaker ignored years of complaints from Black workers at Tesla's main manufacturing plant in Fremont, CA.
A German newspaper reported on Feb. 21, 2022 that Tesla's Autopilot technology was being probed by German regulators. Germany’s motor vehicle authorities are looking into the safety and effectiveness of the automated lane changing technology. Tesla also faces a second probe from the U.S. National Highway Traffic Safety Administration after reports of "phantom braking" of the company's vehicles at high speeds.
The California Attorney General entered the fray in July 2023 after the owner of a 2018 Tesla Model 3 filed a complaint with the Federal Trade Commission alleging that they'd paid thousands of dollars for the company's Autopilot driver assistance systems only to have it result in the phantom braking phenomenon. The U.S. District Court allowed the lawsuit that resulted to be filed in November 2024.
Tesla announced on July 20, 2024, that they would recall 1.85 millions of their vehicles in the U.S. because of software issues that were failing to detect unlocked hoods. The hoods could reportedly spring open unexpectedly, blocking the driver's view. The company had recalled 2,03 million U.S. cars in December 2023 for Autopilot failures.
What Were Tesla's Supply Chain Problems?
Tesla's supply chain crisis dates back to 2022. The company has been able to recover by producing certain components themselves rather than depending on manufacturers. There was a problem with a lack of chip.
What is the best-selling car in the world?
Kelley Blue Book reported that 352,406 Ford F-Series trucks were sold in July 2024. Tesla's Model Y came in at fourth place as of that date with 198,030 sold.
Tesla allows you to design your car, is this true?
Both yes and no. If you buy a Model X, you can customise the wheels, roof, paint and charger. You can't design the car from the ground up, however.
The Bottom Line
Tesla’s most notable accomplishment is its ability to manufacture, sell, and service all-electric cars in key hubs around the globe. However, it has experienced more regulatory problems than most. They've included a software malfunction that caused hoods to fly open and unexpected, phantom braking problems.
Tesla Model Y was reportedly the fourth most popular car in the world by 2024. You can test-drive one for free to see if it’s the right electric vehicle option for you.
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