Tesla profits fall 55%, company says EV sales 'under pressure' from hybrids

Tesla profits fell 55% to $1.13 billion in the first quarter, a prolonged EV price-cutting strategy andMany Unexpected challenges” Cut to the bottom of the vehicle manufacturer.

Tesla announced earnings $21.3 billion In the first quarter, a 9% drop from the first quarter of 2023. Analysts polled by Yahoo Finance had expected earnings of $0.51 per share on revenue of $22.15 billion. Tesla reported operating income of $1.2 billion in the first quarter, down 54% from the same period a year earlier.

The company said in its statement Q1 earnings report It faced “numerous challenges” in the first quarter, including the Red Sea conflict and an arson attack at its Gigafactory in Berlin, as well as the gradual decline of the refurbished Model 3 at its factory in Fremont, California. Tesla also noted that global EV sales continue to be under pressure as many carmakers prioritize hybrids over EVs. On the upside, that hybrid approach means automakers continue to buy regulatory credits; Tesla earned $442 million in zero-emissions tax credits in the first quarter.

The results, released after markets closed on Tuesday, Sent shares up to 9% Immediately after the release, investors seemed to focus more on Tesla's forward-looking comments about future products, including an updated product roadmap. Despite the downward trend in profits, Tesla used its first-quarter report to focus on the future, such as advances in autonomy and the introduction of new products, including those built on its next-generation vehicle platform. The company spent $1.1 billion on research and development in the first quarter, up 49% from the same quarter in 2023.

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Cost reduction

Tesla has seen EV sales grow over the past several years, reaching a new record of 1.8 million vehicles by 2023. But the company's profits have been hit by price cuts that began in late 2022.

While those price cuts gave a temporary boost 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 it delivered in the final quarter of 2023. It's not just over a quarter; Tesla delivered 8.5% fewer cars than in the first quarter of 2023. Vehicle gross receipts, excluding regulatory receipts, shrank to 16.35% in the first quarter from 18.96% in the same year-ago period.

Tesla warned in January that growth in its vehicle sales in 2024 “may be particularly low” as it is between “two big growth waves” and is poised to introduce a new vehicle platform to build the compact EV. $25,000. The company is also producing a “robotaxis” built on the same platform. Meanwhile, Tesla's only new model is the expensive (and confusing) Cybertruck; The company has introduced new variants to existing models, including the Tesla Model 3 Performance.

Tesla CEO Elon Musk said during the company's earnings call in January that the small and cheap EV will be produced at the company's factory in Texas by late 2025, eventually expanding to a yet-to-be-built factory in Mexico.

Three months later, Musk appears to have changed the company's low-cost EV playbook. Musk has reportedly changed plans for a low-cost EV built on a new platform. Instead, he now wants to plow headfirst into robotaxi, which will debut in some capacity in August, while also introducing “new models” that use what's been developed for that new platform.

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Within two weeks of announcing the Robotaxis launch date, Musk cut the workforce by 10% and oversaw a restructuring that focused heavily on autonomy. Two top executives — Drew Paglino, Tesla's SVP of powertrain and energy, and Rohan Patel, VP of public policy and business development — have left the company. Tesla CFO Vaibhav Taneja said during Tuesday's earnings call savings was created From labor reduction expected to do Be Well done Inside Excessive of $1 billion On that day A year basically.

Other sources of income

While automotive revenue fell, there were gains in other areas of the business, particularly energy savings.

The company reported that energy storage deployments increased to a record 4.1 GWh. This led to revenue for energy generation (solar power) and storage rising to 1.6 billion in the first quarter, a 7% increase from the same quarter last year. Tesla noted that much of that growth came from increased Megapack deployments, partially offset by a decline in solar installations.

The company had $2.28 billion in services revenue, including capital generated from its Supercharger network. That revenue stream should grow as more automakers, including Ford, GM, Rivian and VW, adopt Tesla's technology, known as the North American Charging Standard.

The Tesla Semi is delayed

While Tesla pushes forward with autonomy and a new product roadmap, other projects continue to be delayed. First unveiled in November 2017, mass production of the Tesla Semi is now being pushed back for another year.

The Tesla Semi, scheduled to go into production in 2019, has been repeatedly delayed. The company unveiled the production-ready Semi in December 2022 and gave its first customer, Pepsi, a handle for a pilot. But it has not yet increased volume production.

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Last June, Musk said the company wouldn't launch a Class 8 big rig until it was ready By the end of 2024. According to Tesla, the first production Semi vehicles are now scheduled to begin in late 2025 with external customers in 2026.

Tesla is finalizing engineering for the Semi to allow for “super cost-effective high production,” according to information shared on the call. In its first-quarter earnings report, the company said Tesla has begun building a semi-factory near the so-called Gigafactory in Sparks, Nevada.

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