What's going on?

Tesla rode high on record quarterly deliveries � but its profit could be an accident waiting to happen.

What does this mean?

After a lackluster end to 2022, Tesla began this year with a �new year, new me� mindset. So while we resolved to cut calories, Tesla opted to cut prices � offering discounts in all markets, of up to 20%. And sure, that turned out to be a bit of a self-own in China, but the move did give global deliveries a boost: Tesla sent out nearly 423,000 EVs last quarter, outpacing some analysts� predictions and setting a new quarterly record. But there�s a snag: that’s only a 4% uptick from the previous, underwhelming quarter, amounting to 36% growth from the same time last year. And that�s left Elon Musk � who reiterated his famous 50% growth goal back in January � with more than a little egg on his face.

Why should I care?

The bigger picture: Pricey plunge.
Tesla�s problems are spelled out pretty clearly in the fine print. See, while deliveries of bread-and-butter Model 3 and Y EVs grew from the quarter before, its pricier (and more profitable) models actually took a nosedive � a sign of a gloomy economy and consumer belt-tightening. Factor in the Pandora�s box Tesla�s opened by starting a price war, and the firm could be forced to slash prices even further.

For markets: Keep an eye on shares.
Tesla’s stock has been on a roll this year, almost doubling as investors applauded Musk’s push for growth and his production ramp-up. But the stock’s future could hinge on how much these efforts have eaten into profit margins � something investors will learn later on this month. And that�s worth watching out for: the company�s already warned that it’s ready to prioritize growth over profit � and while Tesla�s high margins mean the firm can afford to cut prices, hitting profit too hard could make even dyed-in-the-wool Musk fans jump ship.