In a surprising turn of events, Tesla reported a significant 9% drop in first-quarter revenue, the largest decline since 2012. The electric vehicle company missed analysts’ estimates, citing ongoing price cuts as the main culprit for their current financial woes. This news comes as a shock to many, especially considering Tesla’s previous successes in the market.
According to the latest data, Tesla’s earnings per share were reported at 45 cents adjusted, falling short of the expected 51 cents per share projected by LSEG. Additionally, revenue came in at $21.30 billion, missing the mark of $22.15 billion forecasted by LSEG. These numbers represent a significant decline from the previous year, with revenue dropping from $25.17 billion and net income plummeting by 55% to $1.13 billion.
The sharp decrease in sales was even more pronounced than the company’s last decline in 2020, which was attributed to production disruptions during the Covid-19 pandemic. Tesla’s automotive revenue saw a 13% year-over-year decrease to $17.34 billion in the first three months of 2024.
In response to these challenges, Tesla released a shareholder deck outlining their plans for the future. The company expressed concerns that their volume growth rate may be lower than in previous years, as they prepare to launch new products. Despite these setbacks, Tesla’s energy division saw a 7% increase in revenue, while services and other revenue rose by 25% compared to the same period last year.
Sales growth across the electric vehicle market has been slowing, leading Tesla and other key players to slash prices in an attempt to stimulate demand. This strategy has taken a toll on Tesla’s gross profits, which saw an 18% decline in the first quarter due in part to price cuts.
In response to these challenges, Tesla recently underwent a major restructuring, with two top executives resigning. CEO Elon Musk announced that the company would be cutting more than 10% of its global workforce in an effort to streamline operations.
Looking ahead, Tesla is focused on accelerating the launch of new vehicles, including more affordable models that can be produced on existing manufacturing lines. The company aims to fully utilize its current production capacity and achieve more than 50% growth over 2023 production before investing in new manufacturing facilities.
Despite these setbacks, Tesla’s stock rose about 5% in extended trading after the earnings report was released. It remains to be seen how the company will navigate these challenges and regain its footing in the market.
Opinion:
In my opinion, Tesla’s recent financial struggles highlight the volatility and unpredictability of the electric vehicle market. While Tesla has been a trailblazer in the industry, their current challenges serve as a reminder that success is not guaranteed. The company’s ability to adapt to changing market conditions and innovate will be crucial in determining their future success. As the electric vehicle market continues to evolve, it will be interesting to see how Tesla responds to these challenges and positions themselves for long-term growth.