U.S.-based electric vehicle maker Tesla reported a net income of $2.5 billion in the first quarter of the financial year (FY) 2023, a 24% year-over-year (YoY) drop.

The company said lower profitability was due to the reduced average selling price of its products for the quarter, which combined with higher raw material, commodity, logistics, and warranty costs.

Profitability was also adversely impacted by lower credit revenue, Tesla said.

However, the company posted a 24% YoY growth in revenue at $23.3 billion for the January-March quarter. Tesla attributed it to increased vehicle deliveries and other parts of the business, which include energy storage and solar projects.

Tesla’s adjusted Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) fell by 15% YoY to $4.2 billion in the first quarter of 2023.

Electric Vehicles

The cumulative vehicle production increased by 44% YoY to 440,808 in Q1 2023, while it increased sequentially from 439,701 vehicles.

The vehicle deliveries for the January-March quarter increased by 36% YoY to 422,875.

During Q1, Tesla’s Model Y was the best-selling non-pickup vehicle in the U.S., with sales of over 250,000 Model Ys and Cybtertrucks.

The company launched sales in Thailand, a new market from Shanghai, where its Gigafactory remains the main export hub.

Energy Storage

Energy storage deployments increased by 360% YoY to 3.9 GWh.

“The ramp of our 40 GWh Megapack factory in Lathrop, California, has been successful, with still more room to reach full capacity. This Megapack factory will be the first of many. We recently announced our second 40 GWh Megafactory, this time in Shanghai, with construction starting later this year,” Tesla said in a statement.

Tesla accumulated $1.5 billion of the total revenue from the energy generation and storage business during Q1, up by 148% YoY.

Solar Deployment

The company’s solar deployments increased by 40% YoY to 67 MW but declined sequentially compared to 100 MW in the previous quarter.

Tesla said the quarterly fall in deployments was predominantly due to volatile weather and other factors. In addition, the solar industry has been impacted by supply chain challenges, the company said.

A recent report by Wood Mackenzie said that Tesla Solar Roof achieved 2% of its weekly rooftop solar systems installation target last year due to increasing competition.