You’re here Profits fell 55% to $1.13 billion in the first quarter compared to the same period last year due to a prolonged strategy of cutting prices for electric vehicles and “several unexpected challenges” reduces the financial results of the car manufacturer.
Tesla reported revenue of $21.3 billion in the first quarter, a decrease of 9% compared to the first quarter of 2023. Analysts polled by Yahoo Finance expected earnings of $0.51 per share on revenue of $22.15 billion. Tesla reported first-quarter operating profit of $1.2 billion, down 54% from the same period last year.
The company stated in its First Quarter Earnings Report that it experienced “many challenges” in the first quarter, including the Red Sea conflict and arson at the Berlin Gigafactory and the gradual rollout of the updated Model 3 at its Fremont, England factory. California. Tesla also noted that global electric vehicle sales continue to be under pressure as many automakers prioritize hybrids over electric vehicles. On the positive side, this hybrid approach means that automakers continue to purchase regulatory credits; Tesla earned $442 million in zero-emissions tax credits in the first quarter.
“The global adoption rate of electric vehicles is under pressure and many other automakers are moving away from electric vehicles and instead pursuing plug-in hybrids,” Tesla CEO Elon Musk said in his speech. opening of the results conference call. “We believe this is the wrong strategy and that electric vehicles will eventually dominate the market.”
Stocks Burst on Future Promises
The results, published after the markets closed on Tuesday, sent shares up as much as 9% After the release, investors appeared more focused on Tesla’s forward-looking remarks regarding future products, including a modified product roadmap.
Despite the downward profit trend, Tesla used the first quarter report to focus on the future, including the use of AI to advance autonomy and the introduction of new products, including those built on a next-generation vehicle platform. The company spent $1.1 billion on research and development in the first quarter, an increase of 49% from the same quarter of 2023.
Musk emphasized that despite the downward pressure, the company is focused on and investing in the future. Specifically, the company is accelerating work on a new line of vehicles scheduled for production in early 2025, or even late this year, Musk said.
“These new vehicles, including more affordable models, will use aspects of the next generation platform as well as aspects of our current platforms,” he said. “And we will be able to produce on the same manufacturing lines as our current vehicle range.”
The cost of price cuts
Tesla has seen its electric vehicle sales increase over the past few years, reaching a new record of 1.8 million vehicles in 2023. But the company’s profits suffered from repeated price cuts that began at the end of 2022.
Although these price cuts led to a temporary increase in sales, they did not have a lasting effect. Tesla delivered 386,810 vehicles in the first quarter of 2024, down 20% from the 484,507 delivered in the last quarter of 2023. Nor was this a simple quarter-to-quarter incident; Tesla delivered 8.5% fewer cars than in the first quarter of 2023. Automotive gross margins, excluding regulatory credits, decreased to 16.35% in the first quarter, compared to 18.96% for the same period from last year.
Tesla warned in January that its vehicle sales growth “could be significantly lower” in 2024, noting that it was then between “two major growth waves” and preparing to launch a new platform of vehicles to build a smaller electric vehicle that costs around $25,000. The company is also preparing a “robottaxi” built on the same platform. In the meantime, Tesla’s only new model is the Expensive (and difficult) Cybertruck; the company has launched new variants on existing models, including the Tesla Model 3 performance.
Musk said during the company’s earnings conference call in January that the smaller, cheaper electric vehicle would go into production in late 2025 at the company’s Texas factory and eventually expand to a factory yet to be launched. build in Mexico.
Three months later, Musk appears to have changed the company’s strategy for low-cost electric vehicles. Musk reportedly replaced the plan with a low-cost electric vehicle specially built on the new platform. Instead, it now wants to dive headlong into the robotaxi, which will be revealed to some extent in August, while also launching “new models” that in one way or another use what is being developed for this new platform.
Less than two weeks after the announcement of the robotaxi launch date, Musk oversaw a 10% workforce reduction and restructuring that emphasizes autonomy. Two high-level leaders — Drew Baglino, Tesla’s senior vice president of powertrain and energy, and Rohan Patel, vice president of public policy and business development – also left the company. Tesla Chief Financial Officer Vaibhav Taneja said during Tuesday’s earnings call that the savings generated of downsizing is expected has be GOOD In excess of $1 billion on A annual base.
Other sources of income
While auto sector revenues fell, gains were seen in other areas of the business, including energy storage.
The company reported that energy storage deployments reached a record high of 4.1 GWh. This brought revenues from power generation (i.e. solar) and storage to 1.6 billion in the first quarter, an increase of 7% compared to the same quarter last year. Tesla noted that most of this growth came from increased Megapack deployments, partially offset by a decrease in solar installations.
The company also reported $2.28 billion in revenue from services, including capital generated by its Supercharger network. This revenue stream is expected to grow as more automakers, including Ford, GM, Rivian and VW, adopt Tesla technology known as the North American charging standard.
Tesla Semi delayed
While Tesla is moving forward with autonomy and a new product roadmap, other projects continue to be delayed. Mass production of the Tesla Semi, which was the first revealed in November 2017is now postponed for another year.
The Tesla Semi, originally scheduled for production in 2019, has been delayed several times. The company unveiled a production-ready Semi in December 2022 and delivered a handful to Pepsi, its first customer, for a pilot project. But it still needs to increase its production volume.
Last June, Musk said the company wouldn’t start producing the Class 8 big rig until end of 2024. The first production Semi vehicles are now planned for the end of 2025 and external customers will begin in 2026, according to Tesla.
Tesla is finalizing the engineering of the Semi to enable “highly cost-effective high production,” according to information shared on the call. The company announced in its first-quarter earnings report that it had begun construction of a Tesla Semi factory near its so-called Gigafactory in Sparks, Nevada.
