San Francisco, CA – Electric vehicle giant Tesla faced a significant drop in profits in the first quarter of the year, reporting a decrease to $1.13 billion from $2.51 billion in 2023. The company’s challenges were compounded by a decline in sales, leading to the announcement of thousands of job cuts.
Despite the setbacks, CEO Elon Musk remains optimistic about Tesla’s future, highlighting plans to accelerate the launch of new models. The company’s share price saw an increase, but analysts caution that Tesla still confronts obstacles from lower-cost competitors in the EV market.
The COVID-19 pandemic and global supply chain disruptions have impacted Tesla’s performance, resulting in a 43% decrease in its stock price throughout 2024. While first-quarter revenues fell short of expectations at $21.3 billion, the decision to expedite the introduction of new models boosted Tesla’s shares by nearly 12.5% in after-hours trading.
Emphasizing its commitment to innovation, Tesla aims to redefine itself as more than just an automaker, with Musk underscoring the company’s advancements in AI technology and plans for self-driving vehicles. However, critics question the feasibility of fully autonomous cars, citing technological, regulatory, and operational hurdles.
Investors have varied opinions on Tesla’s strategic direction, with some advocating for a focus on producing affordable, mass-market EVs. In response to declining sales, Tesla has slashed prices in multiple markets to attract new customers. The company contends that the challenges it faces are not unique, pointing to a broader industry shift towards hybrid vehicles over EVs.
As part of its efforts to streamline operations, Tesla announced workforce reductions, with 3,332 jobs in California and 2,688 positions in Texas slated for elimination. Musk downplayed the impact of these cuts, noting the significant job creation Tesla has achieved. Despite these challenges, Tesla’s total workforce grew to over 140,000 employees by the end of last year.
In addition to its operational challenges, Tesla is embroiled in a legal battle over Musk’s compensation package. A judge ruled that Tesla’s directors violated their fiduciary duty by granting Musk a controversial pay-out, which has now been reduced by an estimated $10 billion due to the company’s declining stock value.