Fremont, California — Tesla’s profits fell sharply in the first quarter, with a 55% decrease to $1.13 billion compared to the same period last year, as a challenging market landscape and intense price-cutting strategies affected the electric vehicle (EV) automaker’s bottom line.
Tesla reported a revenue of $21.3 billion in the first quarter, marking a 9% decline from the first quarter of 2023. The figure fell short of the $22.15 billion in revenue projected by analysts polled by Yahoo Finance. The company’s operating income also dropped by 54%, further signaling the intense pressure Tesla is under.
In its Q1 earnings report, Tesla attributed the profit decline to multiple factors, including the ongoing conflict in the Red Sea region, an arson attack at Gigafactory Berlin, and a gradual ramp-up of the updated Model 3 at its Fremont, California, factory. Additionally, Tesla acknowledged the growing competition from hybrid vehicles, which has put a strain on global EV sales.
“The EV adoption rate globally is under pressure as other auto manufacturers prioritize hybrids over EVs,” said Tesla CEO Elon Musk during the earnings call. “We believe that this is not the right strategy and that electric vehicles will ultimately dominate the market.”
Shares rose sharply in response to future promises, despite the immediate downturn. The stock climbed by as much as 12% after the results were released, as investors focused on Tesla’s forward-looking strategy, which includes a revamped product roadmap targeting multiple cheaper vehicles by 2025. This strategic pivot has given some hope to investors as Tesla plans to invest heavily in AI technology and autonomy to fuel its future growth. The company spent $1.1 billion on research and development in the first quarter, up 49% from the same period in 2023.
Despite a shaky start to 2024, Musk emphasized Tesla’s commitment to a more affordable vehicle lineup, aiming to bring production online as early as 2025. This plan includes the introduction of a new vehicle platform and further integration of AI in Tesla’s autonomous vehicle initiatives.
Meanwhile, Tesla’s revenue sources beyond automotive sales showed promise. The company reported strong growth in energy storage, with deployments reaching a record 4.1 GWh. Additionally, the company earned $2.28 billion from services, including revenue from its Supercharger network, which is expected to increase as more automakers adopt Tesla’s charging standard.
However, not all news was positive. The mass production of the Tesla Semi, initially set for 2019, has faced further delays, now pushed to late 2025. Tesla acknowledged that it would take additional time to finalize the engineering for high-volume production and that deliveries to external customers might not begin until 2026.
For more detailed insights, read the full article on TechCrunch.