Tesla's profits are reportedly down 55% due to competition, and its price-cutting strategy finally caught up with that of the automaking giant. Consequently, the news comes weeks after Tesla reported "significantly" lower car sales.
In the first quarter of 2023, Tesla recorded sales of $21.3 billion, a 9% decrease from the previous year. Yahoo Finance surveyed analysts, and they predicted earnings per share of $0.51 on revenue of $22.15 billion.
In the first quarter, Tesla recorded operating profits of $1.2 billion, a 54% drop from last year.
The Red Sea crisis, the arson assault at Gigafactory Berlin, and the phased rollout of the revised Model 3 at its Fremont, California, factory were among the many challenges the firm faced in the first quarter, according to its Q1 financial report.
(Photo: HECTOR RETAMAL/AFP via Getty Images) In this aerial view, the Tesla Gigafactory, which produces electric cars, stands on January 12, 2024, near Gruenheide, Germany.
Tesla also pointed out that many automakers prefer hybrids to electric vehicles, which is putting pressure on worldwide EV sales.
Positively, the hybrid strategy has allowed automakers to continue purchasing regulatory credits; in the first quarter, Tesla received $442 million in zero-emissions tax credits.
The Cybertruck, Tesla's eagerly anticipated electric pickup truck, was introduced last week. This was the company's second financial report since then. It was also its first earnings call since the vehicle was recalled. Other issues with the futuristic steel automobile have arisen.
Following complaints that the cars may become stuck while traveling at maximum speed due to a loose accelerator pedal, Tesla voluntarily issued a recall. However, the business made no direct mention of the recall in its results announcement.
Tesla's Woes
Tesla also recently laid off over 10% of its global workforce as a cost-cutting move. This announcement came after the company saw both a larger decline in the market for electric cars and its first year-over-year sales decline in three years.
Musk forewarned investors that the company's projected 50% revenue increase in 2024 might not materialize. With the Cybertruck and Model Y already in their fourth year without upgrades, Tesla is likewise stuck between product cycles.
In the email, Tesla's senior executive emphasized that the company needs to consider all options to reduce expenses and increase productivity. He claimed that superfluous positions and functions had to be eliminated due to Tesla's explosive expansion.
Tesla also revealed a steep decline in car sales in recent weeks. Only 386,810 vehicles were delivered in the first three months of the year, an 8.5% decrease from the same period last year.
The company's implementation of the updated Model 3 sedan at its Fremont, California, manufacturing facility was a contributing factor in the decline.
Tesla Investors Remain Hopeful
Nevertheless, the report had encouraging news for investors, such as sneak peeks at a ride-hailing app that will be incorporated with Tesla merchandise.
The corporation mentioned a robotaxi network in the works and anticipated releasing additional vehicle models sooner than previously indicated.
In the last three months, it has invested $1 billion in AI infrastructure and doubled the complexity of its AI computing and intelligence software.
Related Article: Elon Musk Reveals Tesla's Strategic Shift: No More Discounts on EVs
(Photo: Tech Times)
