Tesla Q1 earnings plummet 55%, Musk driven to regain investors' trust - Hindustan Times
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Tesla Q1 earnings plummet 55%, Musk driven to regain investors' trust

Apr 24, 2024 07:47 AM IST

Growing competition in China and unenthusiastic vehicle sales hoist dwindling trust among investors—Tesla earnings dip from all aspects.

Tesla reported its first-quarter net income plummetted 55% in 2024 on Tuesday as the revenue was down 9% from last year, marking its biggest drop since 2012. However, as CEO Elon Musk addressed the company's focus switch to “accelerate” production of new cheaper vehicles, the stock price surged in trading after-hours.

FILE PHOTO: FILE PHOTO: Elon Musk, Chief Executive Officer of SpaceX and Tesla and owner of X, formerly known as Twitter, gestures as he attends the Viva Technology conference dedicated to innovation and startups at the Porte de Versailles exhibition centre in Paris, France, June 16, 2023. REUTERS/Gonzalo Fuentes/File Photo(REUTERS)
FILE PHOTO: FILE PHOTO: Elon Musk, Chief Executive Officer of SpaceX and Tesla and owner of X, formerly known as Twitter, gestures as he attends the Viva Technology conference dedicated to innovation and startups at the Porte de Versailles exhibition centre in Paris, France, June 16, 2023. REUTERS/Gonzalo Fuentes/File Photo(REUTERS)

The company is said to have made $1.13 billion from January to March, witnessing a 55% drop from last year's $2.51 billion figure in the same period.

Additionally, Musk addressed the timeline shift in launching the production of new affordable models. It's now expected to begin in “early 2025, if not late this year,” marking a significant preponement from the previously set timeline for the second half of 2025.

Tesla's Q1 earnings

Musk actively drove attention back to the production of affordable EVs since Tesla's slump was attributed to lukewarm market reception for electric vehicles, sparking concern among investors.

As the Tesla CEO addressed the issue, shares grew back 11% after Tuesday's call, but that didn't take away from the fact that they fell more than 40% this year - the lowest figure since January 2023.

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The 9% revenue drop was fuelled by growing competition from China and tepid demand for electric vehicles. On top of that, Tesla also recounted an 8.5% year-over-year fall in vehicle deliveries for 2024 Q1.

More signs of Tesla struggling to perform well were reflected in how the company's Q1 sales dropped 8.5% despite the recent decision to lay off more than 10% of its employees across the board.

The company also presented the layout of the self-driving robotaxi, which is set to be unveiled on August 8. Tesla is counting on this introduction to bolster its future earnings. Musk is already expecting the company to sell more vehicles in 2024 than last year's 1.8 million figure.

On the contrary, if sales falter again in the second quarter, the presently renewed fleeting assurance among the investors will fly out the window once more.

Tesla's gross profit margin, i.e. the revenue left behind after all expenses, dipped to 17.4%. While it peaked in 2022's first quarter at 29.1%, 2023 recorded it at 19.3%.

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