FREMONT, CALIFORNIA – Tesla, the electric car maker, experienced a 55% decline in profits in the first quarter of this year compared to the same period last year. This decline was attributed to a prolonged strategy of cutting electric vehicle prices and facing unexpected challenges. Despite these setbacks, Tesla reported a revenue of $21.3 billion in the first quarter, which was a 9% decrease from the previous year. Analysts had predicted earnings of $0.51 per share on $22.15 billion in revenue, indicating that Tesla fell slightly short of expectations.
In its Q1 earnings report, Tesla acknowledged facing various challenges in the first quarter, including the Red Sea conflict, an arson attack at Gigafactory Berlin, and the gradual production ramp-up of the updated Model 3 in Fremont, California. The company also noted the pressure on global electric vehicle sales as other carmakers favored hybrids over electric vehicles. Despite these obstacles, Tesla managed to earn $442 million in zero emissions tax credits in the first quarter.
Following the release of the earnings report, Tesla’s shares rose by as much as 9%, as investors seemed more interested in the company’s future outlook. Despite the decrease in profits, Tesla remained focused on the future, emphasizing advancements in autonomy and the introduction of new products based on a next-generation vehicle platform. The company also increased its research and development spending by 49% in the first quarter compared to the same period in 2023.
While Tesla has seen growth in electric vehicle sales in recent years, reaching a record of 1.8 million vehicles sold in 2023, its profits have been impacted by continuous price cuts implemented since late 2022. Despite initial boosts in sales, Tesla delivered 20% fewer vehicles in the first quarter of 2024 compared to the previous quarter. This decline, along with shrinking automotive gross margins, reflected the company’s ongoing struggle with profitability.
Looking ahead, Tesla CEO Elon Musk announced plans for a smaller, more affordable electric vehicle to enter production in late 2025 at the company’s Texas factory. Additionally, Tesla is shifting its focus towards autonomous technology, with the introduction of a “robotaxi” expected soon. Recent restructuring efforts, including a 10% reduction in staff, signal Tesla’s commitment to prioritizing autonomy and future innovations.
In terms of revenue sources, Tesla saw gains in energy storage deployments, with revenue from energy generation and storage increasing by 7% in the first quarter. The company also generated revenue from services, including its Supercharger network, with anticipated growth as more automakers adopt Tesla’s North American Charging Standard technology.
Overall, despite facing challenges in profitability and sales figures, Tesla remains committed to advancing its technology, introducing new products, and expanding its presence in the electric vehicle market.