In an aerial view, brand-new Tesla cars sit in a parking lot at the Tesla factory on October 19, 2022, in Fremont, California. Electric car maker Tesla will report third quarter earnings today after the closing bell.
Electric vehicle giant Tesla has reported a sharp decline in its profits, with a 55% drop in the first quarter of 2024 compared to the same period last year. Profits fell to $1.13 billion, driven down by continued price cuts and a challenging market environment that appears to be shifting towards hybrid vehicles. Tesla stated that its profits suffered from “numerous challenges,” including reduced demand and ongoing factory issues, which led to revenue shrinking to $21.3 billion—a 9% drop from the previous quarter.
Elon Musk, Tesla’s CEO, acknowledged the growing pressure from hybrid vehicles, noting that while many automakers are retreating from electric vehicles and focusing on hybrids, Tesla remains committed to a fully electric future.
However, the market reacted positively to Tesla’s forward-looking statements, with shares jumping as much as 12% after the earnings call. Investors seemed buoyed by Tesla’s plans to expand its product line and invest in new technologies. Musk highlighted Tesla’s focus on autonomy and announced an upcoming product roadmap with multiple new vehicles, including more affordable models expected by 2025.
The price cuts that Tesla implemented to boost sales have had a direct impact on profitability. The company’s automotive gross margins, excluding regulatory credits, dropped to 16.35% in the first quarter, compared to 18.96% during the same period in 2023. Despite these setbacks, Tesla has continued to invest in its energy storage business, reporting a record 4.1 GWh in energy storage deployments, contributing to a 7% increase in revenue for this segment.
Tesla’s ongoing efforts to develop the Semi have been delayed, with production now pushed to late 2025. This, along with other challenges, contributes to an uncertain future for the electric vehicle market, particularly as hybrids continue to gain ground. Nevertheless, Tesla’s commitment to autonomy and future vehicle launches keeps investors hopeful for a potential turnaround in the coming years.
For more on Tesla’s financials and product strategy, visit TechCrunch’s in-depth report.