Tesla shares surged by 11% following Elon Musk’s announcement that the company is aiming to commence production of an affordable new electric vehicle by early 2025. The surge came after Tesla reported a significant 9% drop in first-quarter revenue, its largest decline since 2012, falling short of analysts’ expectations amidst ongoing price reductions.
In comparison to Wall Street projections, Tesla’s adjusted earnings per share stood at 45 cents, missing the estimated 51 cents, while revenue totaled $21.30 billion, below the expected $22.15 billion. Revenue decreased from $23.33 billion a year ago and $25.17 billion in the previous quarter, with net income declining by 55% to $1.13 billion, or 34 cents per share, from $2.51 billion, or 73 cents per share, compared to the previous year.
Tesla’s automotive revenue saw a significant 13% year-over-year decline to $17.38 billion in the first quarter of 2024. However, Musk provided optimism during the call, stating that production of new models could potentially begin earlier than initially anticipated, targeting early 2025 or possibly late this year, as opposed to the previously projected second half of 2025. Additionally, Musk highlighted Tesla’s advancements in artificial intelligence infrastructure and ongoing negotiations with a major automaker regarding the licensing of its driver assistance system, known as Full Self-Driving (FSD).
Despite the optimistic outlook, Tesla maintained a cautious perspective for 2024, indicating to shareholders that the volume growth rate may be notably lower than that achieved in 2023. Prior to the after-hours surge, Tesla shares had experienced a more than 40% decline for the year, reaching their lowest point since January 2023, driven by concerns surrounding weak deliveries, competitive pressures in China, and ongoing price reductions. In March, Tesla reported an 8.5% year-over-year decrease in vehicle deliveries for the first quarter.
To address these challenges, Tesla is accelerating the launch of new vehicles, including more affordable models, aiming to utilize its existing production capacity fully and achieve over 50% growth in production compared to 2023 before investing in new manufacturing lines. Furthermore, the company showcased screens of a robotaxi-based ride-hailing service in its shareholder deck, although the promised self-driving vehicle remains undelivered.
Sales growth in the electric vehicle sector is slowing, prompting Tesla and its competitors to reduce prices to stimulate demand, contributing to an 18% decline in Tesla’s gross profits in the first quarter. Despite operational hurdles in the first quarter, including supply chain disruptions, Musk expressed optimism for the second quarter, anticipating improvement.
Tesla’s restructuring efforts included the resignation of two executives and a reduction of more than 10% of its global workforce. Capital expenditures rose by 34% year-over-year to $2.77 billion, with free cash flow turning negative at -$2.53 billion, attributed to inventory buildup and investments in AI infrastructure.
Revenue in Tesla’s energy division increased by 7% to $1.64 billion, while services and other revenue rose by 25% to $2.29 billion compared to the same period last year. When questioned about his commitments to Tesla amidst his various other ventures, Musk emphasized his dedication to ensuring Tesla’s prosperity, though he did not directly address the possibility of leaving the company.
At the conclusion of the earnings call, Martin Viecha, Tesla’s vice president of investor relations, announced his departure from the company after seven years, prompting Musk to express gratitude for his service.