Tesla’s first-quarter net profit fell 55% as falling global sales and lower prices weighed on the electric vehicle maker’s revenue and profits.
The Austin, Texas-based company said it earned $1.13 billion from January to March, down from $2.51 billion in the same period a year ago.
Revenue was $21.3 billion, down 9% from last year, as global sales fell nearly 9% due to increased competition and slowing demand for electric vehicles. Tesla also accused arson at a factory in Germany and plant downtime as it switched plants to an updated version of the Model 3 sedan.
Excluding one-time items such as stock compensation, Tesla earned 45 cents per share, below analysts’ estimates of 49 cents, according to FactSet.
The company’s gross margin, the percentage of income it makes after expenses, fell again to 17.4%. It was 19.3% a year ago and peaked at 29.1% in the first quarter of 2022.
In a letter to investors on Tuesday, Tesla said its vehicle sales growth “may be markedly lower” than last year as it works to launch its next-generation vehicle and other unspecified products.
The next-generation vehicle appears to be the small Model 2, which is expected to cost around $25,000 and make Tesla more attractive to mass-market buyers. It was unclear whether the company would continue to produce this car.
The company also appears to be eyeing a fully autonomous robotaxi vehicle to catalyze future revenue growth. CEO Elon Musk said the robotaxi will be unveiled on August 8th.
Tesla shares rose 5.2% in after-hours trading Tuesday, but they are down more than 40% this year. The S&P 500 rose about 5%.
Investors and analysts will be looking for more concrete answers from Musk on an earnings conference call later on Tuesday. Many analysts say the decline in sales raises questions about demand for Tesla and other models. electric vehicles.
Musk has touted robotaxis as a catalyst for Tesla’s growth since its equipment went on sale in late 2015. He called the system “full self-driving,” although the company says on its website that it can’t drive the car itself. and people must be ready to take control at all times.
In 2019, Musk promised to create a fleet of autonomous robotaxis by 2020 that would generate income for Tesla owners and increase the value of their cars. Instead, they declined due to lower prices as autonomous robotaxis were delayed from year to year during owner testing, when the company collects road data for its computers.
Industry analysts are skeptical and fear Musk has canceled or delayed Model 2 plans.
Tesla on the weekend reduced the price by $2000 Models Y, S and X in the US and have reportedly been cut in other countries, including China. This also reduced the cost of Full Self Driving. by one third to $8000.
In a note to investors Monday, Bank of America Global Research analyst John Murphy wrote that Tesla shares have been under pressure since the start of the year due to declining electric vehicle sales and production exceeding demand.
“We maintain some level of skepticism about Tesla’s growth prospects, but also see opportunity as the company unveils future growth drivers (robotaxis and Model 2) in the coming months,” Murphy wrote, adding that he maintains a neutral rating on the stock.
On Sunday, Musk wrote on his social network X that, like other automakers, Tesla prices change frequently “to align production with demand.”
From January to March, Tesla produced 433,371 vehicles and delivered 386,810, 46,000 more than it sold. This is despite the company slashing prices on some of its more expensive models last year. up to $20,000.
Last week Tesla announced that it would will cut 10% of 140,000 employeesand key executive Andrew Baglino, senior vice president of propulsion and energy, announced their departure after 18 years. The company also announced that it will ask shareholders restore $56 billion wage package for Musk, which was rejected by a Delaware court.
Murphy wrote that on Tuesday he expects Musk and company to give some hints about robotaxis, and may also confirm an intention to begin Model 2 production in 2025 or 2026.
For years, Musk has been telling owners and investors that Teslas with “Full Self-Driving” software and hardware would be able to drive themselves and make money by carrying passengers when they would normally be parked.
But “Full Self-Driving” has so far been nothing more than a partially automated driver assistance system that can’t drive the car itself.
Early last year, the National Highway Traffic Safety Administration forced Tesla to recall its “Full Self-Driving” system because it can behave poorly at intersections and doesn’t always obey speed limits. Tesla’s less complex autopilot system also was withdrawn to strengthen the driver monitoring system.
Some experts, however, don’t think any system that relies solely on cameras like Tesla’s will ever achieve full autonomy.