EV giant Tesla Inc TSLA reported research and development expenses of about $4 billion in FY23, the highest it has to date but much lower than some of the other tech players in the ‘magnificent seven.’
What Happened: While Tesla spent nearly $4 billion, Apple AAPL in its FY23 spent $29.92 billion on research and development, while Microsoft spent $27.2 billion.
“There are gigantic differences in the effectiveness of R&D spending between companies,” Tesla CEO Elon Musk wrote in response to this disparity between the three companies. The sum total of Tesla’s R&D expenses since 2010 when it got listed to date is still below Apple or Microsoft’s R&D expenses in FY23.
Musk was responding to a post by Sawyer Merritt, a Tesla investor, who said, “In 2023, Apple spent ~$29 billion on R&D, a sum greater than the total amount Tesla has spent on R&D in the company’s history. Really shows you how much innovation Tesla extracts per R&D dollar spent.”
The three companies mark their fiscal years differently. While Microsoft’s FY23 ended on June 30, Apple’s ended on Sept. 30, and Tesla’s on Dec. 31.
Why It Matters: In April 2022, Musk said that he thinks of Tesla in its entirety as research and development. He was responding to reports of the company’s lower research and development spending in 2021 as compared to rival automakers including Volkswagen, Ford Motor Co, and General Motors.
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