Tesla reported a 9% drop in first-quarter revenue, the biggest decline since 2012, and missed analysts’ estimates due to ongoing price cuts. Despite this, the stock rose in extended trading after CEO Elon Musk suggested that production of new affordable EV models could start sooner than expected. Earnings per share were 45 cents adjusted compared to the expected 51 cents, and revenue was $21.30 billion as opposed to the $22.15 billion expected. Net income dropped 55% to $1.13 billion from $2.51 billion a year ago.
The drop in sales was more significant than in 2020 and was attributed to price cuts and competition in China. Tesla’s automotive revenue fell 13% to $17.38 billion in the first quarter of 2024. Musk announced plans to start production of new models earlier than originally anticipated and highlighted investments in AI infrastructure and discussions with a major automaker to license its driver assistance system.
Despite the decline in revenue, Tesla is accelerating the launch of new, more affordable models that can be produced on existing manufacturing lines. The company aims to utilize current production capacity fully and achieve over 50% growth in production compared to 2023 before investing in new manufacturing lines. Tesla also showcased screens of a robotaxi-based ride-hailing service in its shareholder deck, reiterating the goal of deploying a self-driving vehicle.
Sales growth in the EV market is slowing, leading to price cuts by Tesla and rivals to stimulate demand. Gross profits fell 18% in the first quarter, partly due to price reductions this year. Tesla recognized deferred revenue in the quarter from earlier sales of its FSD option. Redl, an analyst, estimates the company recognized $700 million in deferred revenue in the quarter. Tesla reported negative free cash flow in the quarter, attributing it to an inventory buildup and capital expenditures on AI infrastructure.
Tesla’s energy division saw a 7% increase in revenue to $1.64 billion, while services and other revenue rose 25% to $2.29 billion compared to the same period last year. Musk, when asked if he plans to leave Tesla due to his various responsibilities, did not provide a direct answer but emphasized his commitment to the company’s success. Tesla’s vice president of investor relations announced his departure after seven years during the earnings call, with Musk thanking him for his service.
