Tesla Raises Spending Budget Again to Drive Production Increase
Tesla Inc. raised its 2023 capital expenditure forecast to continue to increase production in response to increasing market competition on April 24, local time.
Tesla said in a quarterly regulatory filing that it expects capital expenditures of $7 billion to $9 billion in 2023 and each of the following two years. Tesla in January had forecast capital expenditures of $6 billion to $8 billion this year and $7 billion to $9 billion in each of the following two years. This is the second time in nine months that Tesla has raised its capital expenditure forecast.
While Tesla executives have recently been emphasizing cost cutting, the capex forecast has been raised several times in the past nine months as the company has repeatedly lowered the price of its cars. Tesla CEO Musk has previously emphasized that the company's priority is sales growth rather than profits in the context of a weakening economy.
Tesla expects to continue to generate net positive operating cash flow, as it has done over the past four fiscal years. Current macroeconomic and industry trends are having an impact on vehicle pricing and order rates, which will likely continue and further impact operating margins.
Tesla began production of a Model Y for export to Canada at its Shanghai plant this year, the first time it has exported a vehicle from China to the North American market. The Model Y is Tesla's best-selling car worldwide.
The news comes on the heels of a posting on Tesla's website that it will offer a new, lower-priced version of the Model Y in Canada, and information on the Canadian government's website shows that consumers will be eligible for a $5,000 subsidy if they buy the new Model Y. The report said Tesla's Shanghai plant plans to produce nearly 9,000 units of this model vehicle this quarter for sale to the North American market.
Last week, Tesla reported first-quarter 2023 earnings that showed the company's total revenue for the first quarter was $23.329 billion, up 24 percent year-over-year. Of that, total revenue from automotive-related businesses was $19.963 billion, up 18 percent year-over-year.