Once upon a time in January 2023, Tesla’s CFO (at the time) Zachary Kirkhorn declared during an earnings call that Tesla was “most focused” on its operating margin.
At the time, this measure of success was hovering around 16% — unheard of in the automotive industry, where it usually sits in the single digits.
That number has collapsed since Kirkhorn’s comments, thanks in large part to Tesla’s price cuts. It bottomed out at 5.5% in the first quarter of 2024. It rebounded after that, reaching as high as 10.8% in the third quarter. But it cratered again in Q4 — dropping to 6.2%. In the shareholder letter, Tesla blamed lower average selling prices, as well as “operating expenses driven by AI and other R&D projects.”
