Tesla, the world’s largest electric vehicle manufacturer, has reported a significant drop in profits for the first quarter of 2024, citing increased competition from hybrid vehicles and other unforeseen challenges. The company announced a 55% decrease in net profits to $1.13 billion, a steep decline from the same period last year. This downward trend comes as Tesla contends with a shifting automotive landscape, where traditional automakers are emphasizing hybrid technology over fully electric vehicles.
Tesla’s revenue for the first quarter was $21.3 billion, a 9% decrease from the same quarter in 2023. Analysts had expected earnings of $0.51 per share, with total revenue projections at $22.15 billion. The reality fell short, with operating income dropping by 54% to $1.2 billion. In its quarterly report, Tesla attributed the drop to a combination of factors, including an arson attack at Gigafactory Berlin, delays in the Model 3 update rollout at the Fremont plant, and heightened geopolitical tensions in the Red Sea. Tesla also noted that its sales suffered as automakers increasingly turned to hybrid models, which offer a middle ground between electric and combustion engines.
Despite these challenges, Tesla CEO Elon Musk remains optimistic about the future, pointing to significant investment in new technologies and upcoming product lines. The company’s forward-looking statements, which included plans for multiple affordable vehicles by 2025, boosted Tesla’s stock by as much as 12% in after-hours trading. Musk also highlighted Tesla’s investment in artificial intelligence, autonomy, and energy storage, with $1.1 billion spent on research and development in the first quarter—a 49% increase from the previous year.
However, the decline in profits has raised concerns about Tesla’s aggressive price-cutting strategy and its impact on the company’s bottom line. Although price reductions temporarily boosted sales, Tesla delivered 20% fewer vehicles in the first quarter of 2024 compared to the last quarter of 2023, with automotive gross margins excluding regulatory credits shrinking from 18.96% to 16.35%.
Despite setbacks in the automotive sector, Tesla reported growth in its energy storage business, with energy generation and storage revenue increasing by 7% to $1.6 billion. This growth is attributed to a record 4.1 GWh in energy storage deployments, primarily through the Megapack. Tesla’s Supercharger network also contributed to the revenue stream, especially as other automakers like Ford, GM, and Rivian adopt Tesla’s charging standard.
On the production side, Tesla’s upcoming products are experiencing delays. The Tesla Semi, a heavy-duty electric truck, is now set for mass production in late 2025, with deliveries to external customers planned for 2026. This delay adds to previous postponements, with the original launch date initially set for 2019.
While Tesla faces a challenging road ahead, Musk’s focus on innovation and cost-cutting measures, including a recent 10% workforce reduction, suggests that the company is positioning itself for a strategic shift. Tesla CFO Vaibhav Taneja noted that the cost savings from restructuring would exceed $1 billion annually.
For further details and in-depth analysis, read the full report at TechCrunch.
