Layoffs, difficult births, and declining performance
Author/ IT Times reporter Jia Tianrong
Editor/ Qian Lifu Sun Yan
After the U.S. stock market on April 23, Tesla released its financial report for the first quarter of 2024. Despite the decline in a number of key indicators such as revenue, net profit, gross margin, and operating margin, and a sharp decline in global deliveries, the market reacted unexpectedly to the weaker-than-expected earnings report, and the stock price rose after hours.
In the earnings call, Musk revealed a series of strategic deployments: Tesla's low-cost models are scheduled to go into production in early 2025, humanoid robots will be sold by the end of 2025, and a licensing agreement for a fully self-driving system (FSD) is currently being negotiated with a major automaker, and a licensing agreement is likely to be signed this year.
It's all "bad news"
According to the financial report, Tesla's revenue in the first quarter of this year was US$21.301 billion, down 9% year-on-year, down more than 15% from US$25.17 billion in the fourth quarter of last year, and net profit was US$1.129 billion, down 55% year-on-year, far lower than the previous analyst's expectation of US$1.81 billion.
Tesla's gross margin in the first quarter was 17.4%, down 199 basis points year-on-year, while its operating margin fell to 5.5% from 11.4% in the same period last year. Moreover, Tesla's free cash flow turned negative, ending the last quarter at $2.06 billion. Tesla explained that the change was mainly due to a $2.7 billion inventory backlog and $1 billion in capital spending on "AI infrastructure."
In addition to its unsightly performance, Tesla has also performed poorly in the market. In the first quarter of this year, Tesla's global deliveries were 386,800 vehicles, significantly lower than the previous agency's forecast of about 430,000 vehicles, down 8.3% from the same period last year, and down 20.1% from the previous quarter. This is the first time since 2020 that Tesla has experienced a year-over-year decline in deliveries in a single quarter.
Redundancies and difficult births
The world's largest electric car maker is living a "thrifty life", and the layoffs are not unexpected.
Previously, Musk said in an internal email to employees that the company would lay off more than 10% of its global workforce in order to cut costs and increase productivity. According to Tesla's global workforce count, more than 14,000 employees will be affected by the layoffs. Foreign media reported that Musk once intended to lay off 20% of his workforce.
It is understood that the scope of Tesla's layoffs is not limited to North America, but also includes Europe and Asia, and also involves the Chinese market.
According to some of the layoffs, the process from the news of the layoffs to the completion of the resignation procedures was very short, and the compensation plan was relatively reasonable, and most employees were satisfied.
Tesla's earnings report revealed: "We recently carried out a cost-cutting exercise to improve the efficiency of the business. We will also continue to work on reducing costs across the company, including reducing the cost per vehicle. Ultimately, we will focus on profitable growth, including leveraging existing factories and production lines to launch new, more affordable products. ”
At the same time, Tesla announced a new round of price cuts after raising prices in the Chinese market. Tesla China announced that it will reduce the price of all Model Y, Model S and Model X models sold in the Chinese market by 14,000 yuan.
In addition, the production and delivery of the Cybertruck also suffered setbacks. A number of prospective car owners posted that the Cybertruck was originally scheduled to be delivered in the near future, but was told that due to production defects, the delivery of the car would need to be delayed, and the exact delivery time was not known.
In the earnings call, Tesla executives admitted that although the weekly production of the Cybertruck has reached 1,000 units, it still faces many production challenges, and the road to ramp-up is not smooth.
Lower-priced cars drive stock prices higher
Since the beginning of this year, Tesla's stock price has plummeted by more than 40%, and there was a "seven consecutive decline" before the release of the first-quarter earnings report. But unexpectedly, after the release of the earnings report, Tesla rose sharply after hours.
The positive reaction of the capital market may be related to the upcoming low-cost models mentioned by Musk.
In the earnings call, Musk said that Tesla's low-cost models are planned to go into production in early 2025, and there is even a possibility that it will be brought forward to later this year.
Musk admitted that the current demand for electric vehicles is under pressure, and many competitors are turning to the hybrid vehicle field, but Tesla is sticking to the pure electric route and is accelerating the launch of new models, including a more affordable model. The new models will be built on existing and new platforms and will be produced using the company's existing production lines.
Tesla executives also revealed that the company is making updates to its product roadmap with the aim of making more affordable EV options available to consumers faster.
On the same day, Tesla's U.S. website also announced the new Model 3 Performance Edition, which has a number of important improvements to the previous model, with a starting price of $52,990.
Not long ago, the price of Tesla's intelligent driving software FSD (Full Self-Driving) in the United States dropped from $12,000 to $8,000. Wall Street generally believes that Tesla is shifting its strategic focus to self-driving technology. In the financial report, Tesla emphasized this strategy.
Tesla said that the future of cars should not only be electrified, but also self-driving. Achieving autonomous driving at scale relies on big data and powerful AI training capabilities from millions of vehicles, and Tesla already has these resources and will continue to invest in them. By the end of the year, Tesla will have 85,000 Nvidia H100 GPUs to train artificial intelligence.
Musk revealed on the earnings call that he is in talks with a major automaker to license the "Full Self-Driving" system (FSD), and said that a licensing agreement is likely to be signed this year. However, Tesla's management mentioned that even if a licensing agreement is reached this year, it will take three years to integrate it into other cars.
In addition, Tesla's progress in humanoid robots has also attracted much attention. Musk released an optimistic tone, saying that it is expected that by the end of this year, Tesla's Optimus humanoid robot will have the ability to complete "useful" factory tasks, and the company may sell it to the public by the end of 2025, and Tesla plans to use the robot in its own factory by the end of this year.
Typesetting / Ji Jiaying
Image / Tesla
来源/《it时报》公众号vitimes