Tesla Revenue Breakdown, Margin And Growth Rates By Segment

Tesla Model S at a car show. Source: Flickr

Tesla (NASDAQ:TSLA) is an American electric vehicle or EV company with operations scattered all around the world.

The company has been growing at a breakneck speed after debuting from its IPO in June 2010.

To support the world’s demand for EVs, Tesla has been building the world’s largest Gigafactories in several locations globally and the constructions of these mega factories are all progressing in parallel.

This is how the world’s largest EV maker going to conquer the world with its renewable energy ambition and tackle the world’s climate crisis.

Tesla is aiming to become the world’s first technology company that builds not only cars but also the world’s most advanced autonomous vehicles.

As of Feb 2023, Tesla is worth $600 billion USD in market capitalization.

However, this valuation may significantly increase in the future given the trajectory of its growth and the world’s ambition of switching to clean transportation.

That said, Tesla could be worth more than the combined valuation of Apple Inc and Saudi Aramco which is roughly $5 trillion USD, according to Elon Musk.

However, the biggest driver of Tesla’s growth in the future will reportedly come from a subscription-based business model which will include autonomous driving, clean energy leasing, software subscription, and battery-as-fuel subscription for its user base.

Can Tesla pull it off? Absolutely!

In this article, we will look at several of Tesla’s numbers, including the revenue figures, sales breakdown by segment and by region, gross margins, profitability, and growth rates.

Other than the historical numbers, we also will dive into Tesla’s projected revenue growth for fiscal 2023 and what Tesla’s revenue will be like a year from now.

Let’s start with the topics below.

What Makes Up Tesla’s Revenue

Let’s first take a look at the breakdown of Tesla’s sales.

The following snapshot shows the overview of Tesla’s revenue extracted from the company’s consolidated income statements.

Tesla revenue breakdown for FY2022

Based on the snapshot above, Tesla’s revenue is made up of the following segments as of fiscal 2023:

• 1. Automotive sales revenue (inclusive of regulatory credits)
• 2. Automotive leasing revenue
• 3. Services and other revenue
• 4. Energy business revenue

In short, Tesla’s sales come from several revenue segments, including automotive sales and leasing, services, and the energy sector.

In the following discussion, we will look at how each of Tesla’s revenue segments has performed over the years and will perform in the future.

Let’s read on!

Tesla’s Total Revenue (Yearly)

Tesla total revenue by year

On a yearly basis, Tesla’s total revenue soared to a record high as of fiscal 2022 at nearly $81 billion USD.

Tesla made only $4 billion in annual sales 7 years ago.

Between fiscal 2015 and 2022, Tesla’s sales have grown at a compounded annual growth rate (CAGR) of more than 50%.

By fiscal 2023, Tesla’s total revenue is projected to reach $118 billion USD based on the guided vehicle deliveries of approximately 2 million units, a 50% growth from fiscal 2022.

Also, Tesla’s vehicle sale price is averaged at around $52,000 per car according to this article – Tesla’s vehicle average sale price (ASP).

With the estimated ASP and projected sales of 2 million vehicles as well as a growth rate of around 50% for the energy sector, Tesla’s total revenue in fiscal 2023 is estimated to come in at $118 billion, about 45% higher than that of 2022.

In short, Tesla’s sales growth has been extraordinary and will be even more massive going into the future when the world accelerates the transition from fossil-fueled to emission-free automobiles.

Mind you, Tesla’s vehicle deliveries also will be catapulted when autonomous driving becomes mainstream.

Tesla’s Revenue Vs GM And Ford

Tesla total revenue comparison with GM and Ford

While Tesla’s revenue has reached record highs over the years, it was still far behind that of its peers, including General Motors and Ford Motors according to the chart above.

As seen, Tesla’s total sales in fiscal 2022 were only about half of what GM and Ford each made in the same fiscal year.

Looking at the historical figures, both GM and Ford had successfully raked in up to $160 billion in annual sales in the past.

From a comparison perspective, Tesla’s 2022 revenue of $81 billion was still way lagging that of GM and Ford.

Therefore, Tesla has a long way to go before it will achieve the same level of sales as GM and Ford.

Even by fiscal 2023, Tesla’s estimated $118 billion of sales consists of only 3 quarters of what GM and Ford made in 2022.

In short, Tesla’s growth has only just begun and there are still plenty of opportunities ahead for the company as well as for investors to get in the stock now.

Tesla’s Revenue Breakdown By Absolute Value

Tesla total revenue breakdown by value

Tesla’s biggest revenue stream comes from the automotive segment as seen in the chart above.

In fiscal 2022, Tesla made $71.5 billion of automotive revenue, or about 88% of total sales.

Going forward, Tesla’s automotive revenue is estimated to come in at $104 billion for fiscal 2023.

On the other hand, Tesla’s services and energy revenues were a lot smaller, at only $6.1 billion and $3.9 billion respectively in fiscal 2022.

At a 50% growth rate, Tesla’s energy is expected to reach $5.9 billion by fiscal 2023.

The growth drivers in the energy sector will most likely come from Tesla’s solar roof and energy storage in which a mass-market adoption is on track to feasibility.

Apart from the energy revenue, Tesla’s services revenue also has been on a tear and had managed to slightly pull ahead in fiscal 2022.

Also, given a 40% growth rate, Tesla’s services revenue is estimated to reach $8.5 billion in 2023, well ahead of the energy segment revenue.

Tesla’s Total Revenue Breakdown By Percentage

Tesla total revenue breakdown by percentage

On a percentage basis, Tesla’s automotive revenue makes up nearly 90% of the company’s total sales.

For example, Tesla’s automotive revenue constituted 87.7% of total sales in fiscal 2022, roughly in line with that of 2021.

Going into the future, Tesla’s automotive revenue contribution is projected to remain the same at 88% in fiscal 2023.

At the same time, Tesla’s energy sector percentage came in at only 4.8% in fiscal 2022 and is estimated to grow to 5% by fiscal 2023.

On the flipped side, Tesla’s service sector contributed a much higher percentage at 7.5% in fiscal 2022.

Similar to the automotive revenue, Tesla’s service revenue share also is expected to decline in subsequent years and will probably clock lower at 7.2% in fiscal 2023.

Tesla’s Revenue Annual Growth Rates

Tesla total revenue annual growth rates

In terms of growth rates, Tesla’s total revenue grew 71% in fiscal 2021 but this figure came in at only 51% in 2022, a significant slowdown in total revenue growth.

Similarly, Tesla’s automotive revenue growth rates also declined significantly in 2022 compared to 2021, notably at 51% reported in 2022 compared to 73% reported in 2021.

These year-on-year growth rates will be even lower in 2023, at 45% as shown in the chart.

However, a silver lining lies in the energy sector growth rates.

As seen, Tesla’s energy revenue growth rates have been on a rise, topping 40% as of 2022, and are estimated to come in at 50% in 2023.

Despite accounting for only 5% of total revenue, Tesla’s energy revenue growth rates are among the highest in 2023.

Tesla’s Quarterly Revenue

Tesla quarterly total revenue

On a quarterly basis, Tesla made $24 billion in fiscal 4Q 2022 alone, up 37% from a year ago and a new record for the company in the last 8 years.

While Tesla’s quarterly sales have been increasing on a long-term basis, the journey has not been smooth sailing.

For instance, Tesla’s quarterly sales declined by 40% in 1Q 2019 compared to the prior quarter but were still up 12.5% year over year.

Overall, Tesla’s quarterly revenue has been on a rise since fiscal 2015, an important trend for a growing company.

You may see some ups and downs in the plot, but on a long-term basis, we are seeing a rising trend and this is what counts the most.

Tesla’s TTM Revenue

Tesla TTM total revenue

To smooth out the quarterly plot, I created the trailing 12-month (TTM) revenue plot which is shown in the chart above.

The TTM plot is best used to see the trend of Tesla’s revenue on a long-term basis.

As seen in the chart, Tesla’s revenue rose to a record high of $81.5 billion as of fiscal Q4 2022, an increase of more than 50% year on year.

Between fiscal 2015 and 2022, Tesla’s revenue growth has been driven primarily by automotive sales which consist mainly of Model 3 deliveries in the early years and Model 3 and Y deliveries as fiscal 2022.

While automotive sales have been Tesla’s main growth driver, other sectors such as energy and services also have partly contributed to the growth.

All in all, Tesla emerges stronger year on year as seen from the rising TTM revenue.

Tesla’s Quarterly Gross Margin

Tesla quarterly gross margin

The gross margin is an important metric that measures the gross profitability of a company.

Tesla’s gross margin shown in the chart above is measured on a consolidated basis and accounts for only costs of sales while leaving out other expenses such as research and development and SGA.

According to the chart above, Tesla’s gross margin trended lower between 2015 and 2019 and reached the bottom at about 12.4% in 1Q19.

However, the downtrend reversed in 2019 and the gross margin is seen ticking higher since 2019.

From fiscal 1Q 2019 onward, Tesla’s quarterly gross margin was seen rising and reached 23.8% as of Q4 2022.

While gross margin has been on a rise, it went down significantly in Q4 2022 compared to that a year ago.

Tesla’s expanding gross margin between fiscal 2019 and 2022 has been a result of strong Model 3/Y production and deliveries, and the continuous cost reduction due primarily to volume expansion as the company gets more efficient operationally.

According to Tesla’s 1Q 2021 earnings release, Tesla’s average costs per car for all models totaled $84,000 in 2017.

However, Tesla managed to bring the average cost per vehicle to only $38,000 in Q1 2021 by continuously launching new products and building more factories.

This cost of production has been on a decline over the years, according to Tesla, and is achieved through the buildout of localized, more efficient factories, and operating leverage.

As a result, Tesla’s vehicle margin clocked in at more than 20% in fiscal 2021 according to this article: Tesla’s Vehicle Margin Vs Nio, Xpeng And Li Auto.

As shown, Tesla’s vehicle margin is the highest among all Chinese EV companies.

Tesla’s TTM Gross Margin

Tesla TTM gross margin

As mentioned, the TTM curve is used to smooth out the bumps in the quarterly plot and to better observe the long-term trend of Tesla’s gross margin.

From a TTM standpoint, Tesla’s gross margin is seen improving since fiscal 2018 and continued to move higher to the 30% level as of fiscal 2022.

As of fiscal 2022 Q4, Tesla’s TTM gross margin reached 25.6%, roughly in line with that of 2021 but down slightly from the prior quarter.

Tesla’s gross margin is expected to further improve for fiscal 2023 as a result of production volume expansion and continuous cost reduction.

For your information, Tesla’s Gigafactory expansion has been occurring in all localities all around the world.

Therefore, Tesla’s operations will be more efficient due primarily to the growing synergies across all manufacturing platforms.

In return, the growing synergies will drive margin expansion.

Going forward, Tesla is projected to produce and deliver approximately 2 million vehicles by the end of fiscal 2023, a 50% growth with respect to fiscal 2022.

In short, Tesla will see further margin expansion when it cracks the 2 million productions and delivery target by the end of fiscal 2023.

Tesla’s Revenue By Segment (With Automotive Sales)

Tesla revenue by segment with automotive sales

Tesla’s quarterly revenue breakdown shows that the company’s automotive sales have been the primary revenue stream since 2015.

In fiscal Q4 2022, Tesla’s automotive sales revenue alone contributed $20.7 billion in sales to the company, achieving a ratio in excess of 80%.

The lion’s share of the automotive sales revenue tends to make other business segments look insignificant in terms of revenue contribution.

As of fiscal 2022 Q4, none of Tesla’s other business segments has yet to cross the $5 billion revenue mark except for the automotive sector.

However, Tesla’s services and energy revenues have both cracked the $1 billion threshold as of Q4 2022.

Despite having a quarterly combined revenue figure of $3 billion, they made up only 12% of total sales as of Q4 2022.

This scenario shows just how dominant the automotive product or the Model 3 and perhaps the Model Y, is to Tesla.

Tesla has been dangerously walking on a fine line by counting on only a single or possibly 2 products for growth since 2017.

If the Model 3 or Y had failed miserably, Tesla would be in big trouble and possibly go out of business.

There is just too much risk for Tesla to rely wholly on a single product or two for its survival all this while.

Fortunately, Tesla has already started to diversify its products by introducing not only the Model Y, which the company has already started producing and delivering since 2Q 2020 at the Fremont Gigafactory but also Tesla Semi, Cybertruck, etc.

Also, Tesla started producing Model Y at the Shanghai Gigafactory in late 2020 and has already started to ship Model Y to the Chinese market in early 2021.

Tesla Revenue By Segment (Without Automotive Sales)

Tesla revenue by segment without automotive sales

The chart above shows Tesla’s revenue breakdown by segment but without automotive sales revenue.

As seen from the chart, it shows only Tesla’s quarterly revenue from the energy sector, automotive leasing and services.

Accordingly, Tesla’s “services and other revenue” has been increasing and overtaking that of the automotive leasing and energy segments to become the largest revenue contributor since fiscal Q4 2018.

In subsequent quarters, Tesla’s services segment continued to lead the race and reached $1.7 billion USD on a quarterly basis as of fiscal 2022 Q4.

During the same period, Tesla’s energy sector has been fast catching up in terms of revenue growth and at one point even overtook that of the services sector.

However, Tesla’s energy sales dived considerably in 1Q 2021 on a sequential basis but made a comeback in fiscal 4Q 2022 at nearly $1.3 billion in sales on a quarterly basis.

While Tesla’s automotive leasing revenue has been on a rise in the last few quarters, it only managed to reach $600 million on a quarterly basis in fiscal 4Q 2022, the lowest among all business segments.

While Tesla’s energy revenue has been far lower compared to the automotive segment, it may one day become the largest revenue generator for the company as there is huge potential in this business segment.

As we all know, the world is on track to the transition to renewable energy which relies primarily on solar and wind technology.

However, these forms of renewable energy tend to fluctuate significantly and are not as stable as fossil fuels.

Therefore, this is where Tesla is coming in to fill the gap with its cutting-edge battery storage technology.

For your information, Tesla’s energy storage deployment hit record highs as of Q4 2022 at 6.5GWh and this figure has been on a rise irrespective of COVID-19 and supply chain disruptions over the past several years.

In short, there is huge potential in Tesla’s energy sector.

Similarly, Tesla’s services revenue growth continued to outpace most of the other business sectors, growing nearly 55% year on year in fiscal Q4 2022, indicating that its importance cannot be underestimated.

While this revenue segment has exceeded the energy and automotive leasing, Tesla’s “Services and Other” is only a byproduct of the automotive sector, and will only grow along with the automotive segment.

For example, when Tesla’s new vehicle delivery increases, so will the services revenue as the company will have to follow through with all the services and maintenance of these vehicles, resulting in the sales growth of the services business segment.

In short, without the automotive segment, Tesla’s service segment will cease to exist.

Tesla’s Revenue By Region

Tesla revenue by region

The chart above shows Tesla’s revenue breakdown by region into the United States, China, Norway, and Netherlands.

Starting in 2020, Tesla has stopped showing the revenue breakdown for Norway and the Netherlands.

Instead, it has lumped these regions into “Other” in the revenue breakdown as shown in the chart above.

As the chart shows, sales from the United States contributed the most revenue to Tesla all these years, indicating that the U.S. has been by far the largest market for Tesla from fiscal 2015 to 2022.

In fiscal 2022 Q4, Tesla’s sales from the United States alone reached nearly $12 billion, representing about 49% of total sales.

This figure is inclusive of Tesla’s automotive and energy segment revenues as well as other revenue sources in the United States.

Both the Netherlands and Norway as well as the rest of the world contributed the 2nd largest revenue stream to Tesla in 4Q 2022 at $7.8 billion.

This figure falls under the “Other” category as shown in the chart above and is inclusive of international sales from other countries not mentioned here.

China ranks 3rd spot at $4.6 billion in sales in fiscal 2022 4Q.

Tesla’s China revenue made up about 19% of the company’s total sales in 2022 4Q.

Of all the regions, Tesla’s sales from the United States grew the fastest, notably at a YoY growth rate of 52% reported in 4Q 2022.

The rising revenue in the U.S. and China as well as other regions in the world since 2016 shows a strong demand for Tesla’s products, even during a post-pandemic period.

In short, Tesla’s growth in all regions of the world seems unstoppable.

Tesla’s Revenue Sequential Growth Rates

Tesla QoQ growth rates

As seen, there is only a handful of quarters with negative quarterly growth rates as most are positive figures in high double-digits.

As of fiscal Q4 2022, Tesla’s total revenue increased by 13% sequentially, one of the strongest quarters the company has ever reported in 2022.

Tesla’s Total Revenue Year Over Year Growth Rates

Tesla YoY growth rates

For year-on-year growth rates, the results are even more impressive as shown in the chart.

As seen, there are only 2 quarters with negative year-over-year growth rates between 2017 and 2022.

In Q4 2022, Tesla’s quarterly total revenue grew 37%, another record quarter reported in 2022.

Conclusion

To recap, Tesla is not just an automotive player but a software maker as well as an energy specialist.

Therefore, Tesla has vast growth potential.

In fact, Tesla’s growth story may have only just begun and there are so many areas that the company has not even touched on yet, including a subscription-based business model that will detail a swappable battery, charging infrastructure leasing, autonomous software leasing, etc.

Mind you, these areas cover only the automotive segment.

We have yet to touch on the energy sector.

I foresee that Tesla’s energy sector will take off significantly in the near future when the world accelerates the transition from fossil fuel to clean energy.

In short, Tesla’s growth story will get even better in the future.

References and Credits

1. All financial figures in this article were obtained and referenced from Tesla’s quarterly and annual filings which are available in Tesla Investor Relationship.

2. Projected revenues for FY2022 and FY2023 are based on this article: Tesla’s Projected Sales And Growth Rates.

3. Featured images in this article are used under creative commons license and sourced from the following websites: Paulius Malinovskis and CODE_n.

Disclosure

The content in this article is for informational purposes only and is neither a recommendation nor a piece of financial advice to purchase a stock.

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