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Austin-based Tesla has seen a 24% drop in net income amid multiple rounds of vehicle price cuts this year that tightened profit margins.

The carmaker released its latest earnings report Wednesday for its first financial quarter of 2023, which stretched from January through March.

In the report, Tesla said its net income was $2.51 billion in its first quarter, or an adjusted 85 cents per share, matching Wall Street predictions from analysts at FactSet. But it represented a sharp drop in net income from the $3.32 billion it made during the same quarter a year ago. The company's revenue did rise 24% to $23.33 billion compared with the $18.76 billion it saw in the same quarter last year, but that was a drop from its 2022 fourth-quarter revenue of $24.31 billion.

The company said that despite the drop, Tesla believes its operating margin will remain "among the highest in the industry." The company also said it was working to reduce the cost of manufacturing and operations and predicted that over time hardware-related profits would be met with an increase in software-related profits.

Before the earnings call, Tesla already had released information on its vehicle deliveries, the closest comparison to car sales the company discloses. The carmaker said it produced more than 440,808 vehicles and delivered 422,875 vehicles in the company's first quarter, an uptick from the previous quarter.

While the sales are a quarterly record for the company, year over year delivery growth of 36% is slimmer when compared with the first quarter of 2022, which saw 68% growth year over year.

Tesla also said it expected to reach its goal of increasing vehicle deliveries 50% each year on average and would deliver about 1.8 million cars this year.

In the investor report Wednesday, Tesla said it views the current economic environment as a "unique opportunity" to leverage its position as a cost leader, as other carmakers work through the unit economics of electric vehicle making. Tesla said it plans to increase production and its investment in vehicle software and in autonomy — the type of software used in driverless car technology — and remain on track for growth.

On a call with shareholders Wednesday, CEO Elon Musk said pushing for higher volumes and a larger fleet is better for the company versus a lower volume. He also said it is a good time for Tesla to increase its lead in the electric vehicle market as it continues to invest in growing as fast as possible.

"We expect our vehicles over time will be able to generate significant profit through autonomy, so we do believe we're laying the groundwork here, and instead have to ship a large number of cars at a lower margin, and subsequently harvest that margin in the future as we perfect autonomy," Musk said.

The CEO made promises related to self-driving vehicle technology, which he said throughout the call will lead to higher profits even as the electric vehicle company has yet to make a fully autonomous software.

In the report, the company said it expects to continue cost reductions, which include improving efficiency at its newest factories, lowering logistics costs and scaling. Tesla also said its near-term pricing strategy on vehicles takes into account long-term vehicle profitability through autonomy, supercharging and service.

"We expect that our product pricing will continue to evolve, upwards or downwards, depending on a number of factors," the report said. "Although we implemented price reductions on many vehicle models across regions in the first quarter, our operating margins reduced at a manageable rate."

Tesla's stock dropped more than 6% after hours Wednesday.

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Tuesday night ahead of the report, Tesla once again dropped prices for two of its vehicles, the fourth such price cut in the United States this year. The latest cut dropped the price of a Model Y SUV about $3,000, or 6%, and dropped the Model 3 prices $2,000, or about 5%. These followed cuts in early January, when Tesla dropped prices in the United States and Europe, after doing so in China in December. Tesla again cut prices in March and early April.

The cuts have come as the electric vehicle market competition heats up, including from legacy automakers gaining traction in the electric vehicle market. Investors and analysts had said it would be important to see during the earnings call where the company's margins fell amid the price cuts.

Ahead of the earnings call, industry analyst Dan Ives of Wedbush Securities said that while Tesla still has the largest share of the electric vehicle market, increased competition probably brought on the price cuts. He predicted the cuts brought increased demand amid an uncertain economic environment but could lead to revenue impacts.

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The earnings call comes about a year after Tesla delivered its first Austin-made Model Y vehicles and held a grand opening for its southeastern Travis County facility. The company moved its headquarters to the same site in late 2021.

The facility is also expected to produce Model 3s, Cybertrucks and vehicle batteries, and is expected to play a key role in Tesla's ramp-up and ability to maintain its growth.

In its latest earnings report, the company said equipment installation for Cybertruck production "remains on track" and continued during this quarter, and the vehicle is still expected to start production this year. The vehicle is expected to play an important role in staying competitive as other companies roll out electric trucks.

On the call, Musk said the Cybertruck is "a very radical product" that is not made in the same way as cars. He said he anticipates the company will hold a delivery event for the vehicle during its third quarter.

Last year the facility, which continues to expand its footprint, scaled to more than 12,200 employees, according to a report the company submitted to Travis County. The number outpaces Musk's previous estimate that it would hire 10,000 within the same timeline and makes Tesla one of the largest technology employers in Central Texas.

Tesla tweeted this month that the facility had reached the ability to produce 4,000 Model Y vehicles a week. The company's earnings report said the facility has the capacity to produce more than 250,000 Model Y's a year.

The report also credited Austin and Berlin for their ability to produce a record number of vehicles. But both the report and executives on the shareholder call noted that headwinds remain and growth in vehicle deliveries came despite "underutilization of new factories."

Executives on the call said the Texas facility has seen significant improvements as it continues to build out and production has increased 50% quarter over quarter. At the same time, the company has started to build out its battery production capabilities there. Tesla executives also pointed to the buildout of a Corpus Christi-area lithium refinery, which broke ground this year and which executives said will be operational in 2023. The refinery is expected to provide a key material for batteries, including those produced in Austin.

Musk said the refinery will help give Tesla the most lithium refining capability, and the most cathode refining capability, in North America, probably more than all other car manufacturers combined.

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Musk doubled down on autonomy as a future profit driver throughout the call, even while admitting the company's controversial beta software could be "two steps forward, one step back" between releases. He said Tesla is in a "uniquely strong strategic position," saying the company is the only one in the market that could sell its cars for zero profit now if it wanted and then see "tremendous economics in the future through autonomy."

"The trend is very clearly towards full self-driving, towards full autonomy," Musk said. "I think we'll do it this year."

The lofty promises come as Tesla has yet to produce a fully autonomous car. Currently, all Tesla vehicles produced after 2014 are outfitted with some level of enhanced driver assistance technology. But the company also offers a "full self-driving software" that can be purchased as an add-on feature for $15,000, or $199 a month. The software allows Tesla vehicles to park, switch lanes, recognize traffic signs and lights, and get on and off highways.

Despite its name, Tesla's "full self-driving" technology is not considered truly autonomous by industry experts or the company itself. It requires active driver supervision, and drivers must keep their hands on the wheel.

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The software has also been the center of multiple recalls and scrutiny, including several high-profile crashes in which the software was engaged. The software also has faced investigations by the National Highway TrafficSafety Administration, and the Justice Department has requested documents from Tesla related to the autopilot and full self-driving features. Drivers and the California Department of Motor Vehicles have filed lawsuits related to the software accusing Tesla of false advertising.

On the call, Musk said the company's current vehicles will be capable of autonomy and predicted it could add significant value to the company.

"If we're able to have a fleet of several million vehicles that, with a software update, can be several times their original value ... if that happens, and I think will happen, that will be the biggest asset value increase in history," Musk said

However, his predictions are far from the first he has made on autonomous vehicles, and the company has blown timelines before. This includes in 2015, when Musk predicted Tesla cars would drive themselves by 2018, and last year, when he said the company would achieve full self-driving that year.