What To Expect From Tesla’s Q2 Results?

$Tesla(TSLA.US)$ has already reported delivery numbers for Q2 2023, indicating that deliveries grew 83% year-over-year to 466,140 units. While the growth rates were driven in part by a favorable comparison with Q2 2022 when the company’s Chinese business declined sharply amid strict Covid-19-related lockdowns, Tesla has also likely benefited from price cuts on popular models and an expansion of manufacturing capacity. For perspective, Model Y presently sells at more than 20% below last year’s prices. Moreover, the Model 3 and Y are also eligible for the $7,500 tax credit under the Inflation Reduction Act in the U.S. and this is also making Tesla’s EVs more accessible to a broader customer base. The ramp-up of production at Tesla’s factory in Texas is also helping supply to an extent. While higher volumes are positive, Tesla’s average selling prices are likely to trend meaningfully lower and this is also likely to impact margins over Q2. Automotive gross margins over Q1 2023 stood at 19.3%, down almost 10% compared to the year-ago quarter and we should see a similar year-over-year decline over Q2 as well.