Tesla Revenue Breakdown, Profitability And Margin By Segment

Tesla Model S at a car show. Source: Flickr

Tesla is a prominent American automotive and clean energy company founded in 2003 by Elon Musk, JB Straubel, Martin Eberhard, Marc Tarpenning, and Ian Wright. The company primarily deals with the manufacturing and selling of electric cars, solar panels, energy storage systems, and related products.

Tesla is widely known for its innovative and groundbreaking technology, which has revolutionised the automotive industry and paved the way for the widespread adoption of electric vehicles. The company’s mission is to accelerate the world’s transition to sustainable energy by providing clean energy solutions that are affordable, efficient, and accessible to everyone.

Over the years, Tesla has established itself as a leader in the clean energy sector, with a strong focus on sustainability, innovation, and customer satisfaction.

This article explores several statistics of the company, which include revenue, profitability, and margins.

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Definitions

To help readers understand the content better, the following terms and glossaries have been provided.

Automotive Segment: Tesla’s automotive segment refers to the company’s core business of designing, developing, manufacturing, selling, and leasing high-performance fully electric vehicles.

This segment also includes the sales of automotive regulatory credits. In addition, Tesla’s automotive segment also includes services and other offerings such as the sales of used vehicles, non-warranty after-sales vehicle services, body shops and parts, paid supercharging, vehicle insurance revenue, and retail merchandise.

Energy Generation And Storage Segment: Tesla’s energy segment includes the design, manufacture, installation, sales and leasing of solar energy generation and energy storage products and related services and sales of solar energy systems incentives.

In particular, Tesla offers solar panels, solar roofs, and energy storage solutions like the Powerwall and Powerpack. These products aim to help homeowners, businesses, and utilities transition to clean energy and reduce reliance on fossil fuels.

Additionally, Tesla provides related services such as installation, maintenance, and support to ensure customers get the most out of their solar and storage systems.

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Tesla Segment Information

Tesla operates as two reportable segments: (i) automotive and (ii) energy generation and storage.

The definitions of Tesla’s automotive and energy generation and storage segments are available here: Automotive and Energy Generation And Storage.

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How Does Tesla Earn Revenue

Tesla earns revenue primarily by selling electric vehicles, energy storage systems, and solar products. Most of its revenue comes from selling its electric vehicles, with the Model 3 being the most popular and affordable option.

In addition to vehicle sales, Tesla generates revenue through the sale of energy storage systems, such as the Powerwall and Powerpack, which are designed to store energy generated from solar panels or the grid. The company also sells solar products, including solar panels and solar roofs, which generate electricity for homes and businesses.

Additionally, Tesla earns revenue through its Supercharger network, which provides fast charging for Tesla vehicles.

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How Does Tesla Sell Its Products

Automotive

Tesla sells its automotive products through its website and a network of company-owned stores worldwide. In some regions, Tesla also has galleries that educate customers about their products, but these locations do not conduct sales transactions.

Tesla believes that this sales infrastructure helps them to manage inventory costs, warranty service and pricing, educate customers about electric vehicles, make their products more affordable, maintain and strengthen the Tesla brand, and quickly receive customer feedback.

Tesla periodically reevaluates its sales strategy globally and at a location-by-location level to optimize its sales channels. However, the cyclical nature of the automobile industry in many markets may expose Tesla to volatility from time to time.

Energy Generation And Storage

Tesla markets and sells its solar and energy storage products to various customers, including residential, commercial, and industrial customers and utilities. They use a variety of channels to sell their products, including their website, physical stores and galleries, and a network of channel partners.

They also offer power purchase agreements (PPAs) for some commercial customers, allowing them to purchase electricity generated by Tesla’s solar panels without investing in the equipment upfront. Tesla emphasises simplicity, standardisation, and accessibility to make it easier and more cost-effective for customers to adopt clean energy.

By doing so, they also hope to reduce their customer acquisition costs.

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Total Revenue By Year

Tesla total revenue by year

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Tesla earned US$96.8 billion, US$81.5 billion, and US$53.8 billion in total revenue for the fiscal years ended on Dec 31 2023, 2022, and 2021, respectively.

Tesla is expected to earn US$115.1 billion in total revenue by the end of fiscal 2024, according to the projected revenue for each segment presented here: Tesla revenue by segment.

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Total Revenue By Quarter

Tesla quarterly total revenue

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Tesla earned US$25.2 billion, US$23.4 billion, and US$24.9 billion in quarterly total revenue for the quarter ended on Dec 31 2023, Sept 30 2023, and June 31 2023, respectively.

The 4Q 2023 quarterly revenue represents a rise of 4% from a year ago.

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Total Revenue By TTM

Tesla total revenue by ttm

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Tesla’s TTM revenue reached US$96.8 billion in fiscal 4Q 2023, up 19% from a year ago.

Based on the extrapolated results, Tesla’s TTM revenue is estimated to land at US$117.1 billion by 4Q 2024, representing a rise of 21% over 4Q 2023.

In addition, Tesla may deliver up to 2.4 million vehicles in the same period, according to the projected figure here: Tesla production and delivery numbers.

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Revenue YoY Growth Rates

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Although revenue growth has significantly slowed post-pandemic, it still grew 18.8% year-over-year as of fiscal 4Q 2023.

A year ago, Tesla’s YoY revenue growth gained 51%.

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Gross Margin By Quarter

Tesla quarterly gross margin

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Tesla’s quarterly gross margin, a GAAP measure, fluctuates quite dramatically.

In post-pandemic periods, Tesla’s quarterly gross margin has significantly declined. As of 4Q 2023, Tesla’s quarterly gross margin was only 17.6%, down considerably from 23.8% a year ago.

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Gross Margin By TTM

Tesla TTM gross margin

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Tesla’s TTM gross margin has significantly decreased since 2022.

As of 4Q 2023, Tesla’s TTM gross margin declined to only 18.2%, down significantly from 25.6% a year ago.

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Automotive And Energy Revenue

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The definitions of Tesla’s segments are available here: Automotive and Energy.

Tesla’s services fall under the automotive sector and are presented here to show the significant growth.

In addition, Tesla automotive revenue includes sales of carbon credits and leasing revenue. Investors interested in Tesla’s regulatory credits and leasing may find more information on these pages: Tesla carbon credits sales and leasing revenue.

That said, the automotive revenue is Tesla’s largest revenue stream and is much higher than the energy revenue even without including the services segment.

Tesla earned US$82.4 billion in automotive revenue, excluding the services segment, in fiscal 2023, while the energy revenue landed at US$6.0 billion in the same period.

Tesla’s service revenue alone accounted for US$8.3 billion in fiscal 2023, a much higher figure than the energy segment.

In fiscal 2024, Tesla’s automotive revenue may reach at least US$94.8 billion, while the energy revenue is estimated at US$9.1 billion.

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Automotive And Energy Revenue In Percentage

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The definitions of Tesla’s segments are available here: Automotive and Energy.

Tesla’s automotive revenue alone (excluding the service segment) accounted for 85.2% of the company’s total sales in fiscal year 2023.

The automotive percentage has slightly increased since 2019 but is expected to decline to 82.3% in fiscal 2024 due to the rise of revenue in other segments, the energy in particular.

Tesla’s energy segment accounted for 6.2% of its total revenue in fiscal 2023. This ratio may reach 7.9% in fiscal 2024 due to the significant growth in recent years.

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Automotive And Energy Revenue Growth Rates

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The automotive sector is still Tesla’s best-performing segment, with the best growth rate. The 3-year average growth rate of the automotive segment arrived at 47%, while the energy segment gained 45%.

Tesla’s services sector grew 54% on average between 2021 and 2023.

Tesla’s automotive may grow 15% in 2024 over 2023 due to the conservative outlook given by the company. On the other hand, Tesla’s energy is projected to grow 50% year-on-year in fiscal 2024 due to the upbeat outlook provided.

The following quote depicts the outlook provided in the 4Q 2023 investor’s letter.

• In 2024, our vehicle volume growth rate may be notably lower than the growth rate achieved in 2023 as our teams work on the launch of the next-generation vehicle at Gigafactory Texas.

  In 2024, the growth rate of deployments and revenue in our Energy Storage business should outpace the Automotive business.

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Automotive And Energy Gross Profit

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The definitions of Tesla’s segments are available here: Automotive and Energy. The automotive sector is Tesla’s largest profit contributor.

In fiscal 2023, Tesla’s automotive segment generated a gross profit of more than US$16.5 billion, roughly 15X higher than the energy segment’s gross profit of only US$1.1 billion.

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Automotive And Energy Gross Margin

tesla-automotive-and-energy-gross-margin

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The definitions of Tesla’s segments are available here: Automotive and Energy. Overall, Tesla’s automotive sector is much more profitable than the energy sector when examined from the perspective of gross margins.

Tesla’s automotive gross margin reached 18.2% in fiscal 2023, while the energy sector gained 18.9%, slightly better than the automotive segment for the first time over five years.

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U.S. And China Revenue

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Tesla derives most of its revenue from the United States, topping US$45.2 billion in fiscal 2023.

China is Tesla’s second largest revenue source by country, coming in at US$21.7 billion in fiscal 2023.

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U.S. And China Revenue In Percentage

tesla-U.S.-and-China-revenue-in-percentage

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Tesla’s U.S. revenue accounted for 46.7% of the total revenue in fiscal 2023, while China accounted for 22.5% in the same period.

The revenue share from the U.S. has decreased from 51.5% in 2015 to 46.7% as of 2023, while the percentage of China has increased from 12.1% to 22.5 for the same period.

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U.S. And China Revenue Growth Rates

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Tesla’s U.S. revenue grew 46% on average between fiscal 2021 and 2023, while China’s growth rate arrived at 53% on average.

However, Tesla’s revenue growth in the U.S. and China has significantly slowed in fiscal year 2023.

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Total Revenue Vs GM And Ford

Tesla total revenue comparison with GM and Ford

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While Tesla’s revenue has grown significantly over the years, it still lags its peers, including General Motors and Ford Motors, as shown in the chart above.

However, Tesla is fast catching up. For example, as of 2023, Tesla’s revenue figure closed at about 60% of GM and Ford Motor.

Tesla’s revenue may soon surpass GM and Ford based on the projectile.

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Conclusion

Tesla’s revenue has steadily increased due to the growing demand for electric vehicles and renewable energy solutions. In 2023, Tesla’s revenue was US$96.8 billion, a significant increase from the previous year’s revenue of US$81.5 billion.

This growth can be attributed to the launch of new models, such as the Model Y and the Cybertruck, and the company’s expansion into new markets.

Despite the challenges posed by the COVID-19 pandemic, Tesla managed to maintain its revenue growth and continues to be a leader in the electric vehicle industry.

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References and Credits

1. All financial figures presented in this article were obtained and referenced from Tesla’s SEC filings, earnings releases, shareholders letters, quarterly and annual reports, etc., which are available in Tesla Investor Relations.

2. Featured images in this article are used under a Creative Commons license and sourced from the following websites: Paulius Malinovskis and CODE_n.

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Disclosure

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