Tesla, the electric vehicle (EV) giant, reported a dramatic 55% drop in first-quarter profits, highlighting the challenges facing the EV industry. The company blamed “several unforeseen challenges” and increased competition from hybrid vehicles for the decline. This downturn in profitability, coupled with reduced EV sales, has prompted concerns about Tesla’s growth trajectory.
In the first quarter of 2024, Tesla’s net income fell to $1.13 billion, a significant decrease compared to the same period in 2023. Revenue also dropped to $21.3 billion, a 9% decrease from the first quarter of 2023. Analysts had expected a more robust performance, with projections of $0.51 earnings per share and $22.15 billion in revenue. Despite these declines, Tesla shares surged by 12% in after-hours trading, possibly due to optimistic forward-looking statements from CEO Elon Musk.
The company’s Q1 earnings report pointed to several reasons for the profit decline, including the arson attack at Gigafactory Berlin, the slow rollout of the updated Model 3, and ongoing conflicts in key regions. Additionally, Tesla acknowledged that global EV sales were under pressure, with other automakers prioritizing hybrid vehicles. This shift in focus has led to a decrease in Tesla’s automotive gross margins, excluding regulatory credits, to 16.35% in the first quarter, down from 18.96% in the same period last year.
Despite the challenging environment, Tesla is keen to push forward with ambitious plans, including new vehicle launches and increased investment in AI and autonomous technology. The company spent $1.1 billion on research and development in the first quarter, marking a 49% increase from 2023. This significant investment underscores Tesla’s commitment to innovation and the introduction of new products built on a next-generation platform.
Tesla also experienced setbacks with its Semi truck production, with the mass production timeline delayed yet again. The first production-ready Semi vehicles are now slated for late 2025, with external customers starting in 2026. This ongoing delay raises questions about Tesla’s ability to scale its product range effectively.
Meanwhile, the company’s energy storage segment showed positive growth, with deployments reaching a record 4.1 GWh, contributing to $1.6 billion in revenue for energy generation and storage, a 7% increase from the previous year. This sector’s growth highlights the potential for diversification beyond the automotive industry.
As Tesla navigates these headwinds, the company remains focused on future developments and expansion into new markets. Musk’s strategic shift towards robotaxis and a new lineup of vehicles suggests a renewed focus on innovation and maintaining Tesla’s position as a leader in the electric vehicle industry.
For more information on Tesla’s latest developments and the evolving EV market, visit TechCrunch https://techcrunch.com/2024/04/23/tesla-profits-drop-55-company-says-ev-sales-under-pressure-from-hybrids/
