Electric vehicle (EV) manufacturer Tesla has reported a dramatic 55% drop in profits in the first quarter of 2024, revealing that the EV market is under pressure from hybrid vehicles and other challenges. The company’s revenue also decreased, falling to $21.3 billion, a 9% drop from the previous year, raising concerns about the automaker’s future strategy.
Despite the challenges, Tesla CEO Elon Musk remained upbeat about the company’s direction, focusing on new products and technology. Tesla’s operating income decreased by 54%, largely due to unforeseen events, such as the Red Sea conflict and an arson attack at its Gigafactory Berlin. The company also mentioned that the slower ramp-up of the updated Model 3 at the Fremont factory contributed to the downward trend.
The EV market has faced increased competition from hybrids, with many automakers rethinking their approach to electric vehicles. Tesla’s CEO acknowledged this pressure, but he maintained that the company would continue to focus on pure electric vehicles, as he believes they will ultimately dominate the market. This strategic vision appeared to resonate with investors, as Tesla’s shares surged by 12% after the earnings release.
Tesla’s focus on future innovation was highlighted in its Q1 report, indicating that the company has been investing heavily in research and development, spending $1.1 billion in the first quarter, a 49% increase from the same period last year. Musk emphasized that the company is working on a new vehicle lineup and hinted at new models using a next-generation platform, with production expected in 2025.
However, Tesla’s strategy of price cuts to stimulate EV sales has taken a toll on its profits. The company delivered 386,810 vehicles in the first quarter, down 20% from the previous quarter and 8.5% from the same period in 2023. Automotive gross margins, excluding regulatory credits, also dropped, raising questions about the long-term sustainability of Tesla’s pricing strategy.
Tesla’s other projects, such as the Tesla Semi, have also experienced delays. Initially planned for 2019, the Semi’s mass production has been postponed to 2025, with external customer deliveries expected in 2026. Despite these setbacks, the company continues to make strides in other areas, like energy storage, where it recorded a record 4.1 GWh deployment in the first quarter, driving energy generation and storage revenue up by 7%.
For more details on Tesla’s Q1 earnings report and its strategic roadmap, visit TechCrunch.
