Image source: Positioning mag.com Tesla's first-quarter results were worse than expected, but the news of the launch of lower-priced models has greatly attracted investor interest.
On April 23, local time in the United States, Tesla's after-hours financial report showed that the company's operating income in the first quarter of 2024 was US$21.301 billion, down 8.7% year-on-year, slightly lower than the US$22.3 billion expected by analysts, and the net profit attributable to ordinary shareholders was US$1.129 billion, down 55% year-on-year, lower than the US$1.81 billion expected by analysts.
Despite the thunderous performance, Tesla CEO Elon Musk then released heavy news on the earnings call, saying that Tesla plans to start producing new models, including low-cost electric vehicles, "in early 2025, if not later this year". With the release of this good news, as of press time, Tesla's stock price stopped falling and rose more than 13% after hours.
Growth to "drop significantly" in 2024
Overall, Tesla's first-quarter results were lower than expected. Operating margin narrowed significantly to 5.5% from 11.4% in the year-ago quarter, and adjusted earnings per share were $0.45, below Wall Street's expectations of $0.52. However, the gross margin was 17.4%, slightly higher than analysts' expectations of 16.5%.
In terms of sales, Tesla's global sales in the first quarter were 386,800 units, down 8.3% year-on-year and 20.1% month-on-month, significantly lower than the external expectation of about 430,000 units. This is also the first time since 2020 that Tesla's deliveries have declined quarter-over-quarter, mainly due to the slowdown in global EV demand.
Tesla reiterated in its earnings report that the growth rate in 2024 may be "significantly lower" than the previous year. According to Tesla executives, Tesla is in between two waves of growth: the first is driven by its popular Model Y and Model 3 vehicles, and the next wave will be accompanied by advances in autonomous driving and the introduction of a new generation of vehicles.
After discussing the operational challenges of the first quarter, including supply chain disruptions caused by the Red Sea crisis, Musk said on the call: "We think the second quarter will be much better. In addition, Tesla stressed: "Global EV sales continue to be under pressure as many automakers prioritize hybrids over electric vehicles." While many companies are scaling back their investments, we are still investing in future growth. ”
At present, Tesla is facing fierce competition in the global electric vehicle market, and the price war is also round after round. Tesla's two ace models, Model 3 and Model Y, have been launched for several years, and their competitiveness has declined. Recently, Tesla has cut the prices of electric vehicles and self-driving software across the globe to stimulate demand.
Production of the low-cost model is finalized
In addition to price cuts, in terms of products, Tesla said it has updated its future model lineup to accelerate the launch of new models, including more affordable models.
Not long ago, Reuters quoted sources familiar with the matter as "exclusive revelations" that in the fierce competition with China's electric vehicles, Tesla has canceled the production plan of the low-cost Model 2 and instead went all out to develop self-driving taxis. The Model 2 has been pinned on by investors, with a price expected to be around $25,000, and is expected to be the next hot model to drive Tesla's growth. Although Musk quickly spoke out on the social platform X, denying the Reuters report, it failed to reverse Tesla's decline. Until the release of the earnings report, Tesla's stock price has fallen for several days, and the stock price has fallen by more than 40% since 2024.
During the call, Musk said he plans to start production of new models by the end of this year or early 2025, including lower-priced electric vehicles, earlier than previously planned for the second half of 2025. The news greatly reassured investors and pushed Tesla's stock price up sharply after hours. In addition, some analysts asked for details about the low-cost model, but Musk did not respond.
On the same day, Tesla released the new Model 3 high-performance version, which has been improved in appearance, performance, handling and other aspects, with a price of $52,990 in the United States and 335,900 yuan in China. Musk claims that the Model 3 is faster than the Porsche 911. In addition, on April 24, Tesla launched the "0 Yuan Season" campaign in China, where you can enjoy "0 down payment" and preferential interest rates for existing cars with a designated version of Model 3, and you can enjoy "0 down payment" or "0 interest for a limited time" when you order a designated version of Model Y.
In terms of production, Tesla said that the new model will be able to share the production line with the existing model, with the goal of "making full use" of the existing production capacity and achieving "more than 50% increase in production compared to 2023" before investing in the new production line.
Tesla CEO Elon Musk Image source: PM Milestone website
More than 6,000 layoffs have been submitted
It is worth noting that on April 23, before the first quarter results were announced, Tesla announced that it would lay off 6,020 employees in California and Texas. Tesla's Worker Adjustment and Retraining Notification Act, filed with California and Texas, shows that the company will lay off 3,332 workers in California and 2,688 in Texas starting June 14. Under U.S. labor law, companies with 100 or more employees must give 60 days' notice when planning a shutdown or mass layoffs.
It is reported that on April 15, Musk issued a letter to all employees saying that Tesla will lay off "more than 10%" of employees worldwide in response to the decline in sales and the intensification of the price war for electric vehicles. By the end of 2023, Tesla had a total of 140473 employees worldwide. At this rate, at least 14,000 employees will leave Tesla.
Two of Tesla's key executives, Drew Baglino, senior vice president of battery development, and Rohan Patel, vice president of public policy and business development, have announced their departures. Towards the end of the earnings call, Martin Wicha, Tesla's vice president of investor relations, also said that he would leave the company in a few months. Vicha has been with Tesla for 7 years.
In addition to layoffs in the United States, it is understood that Tesla's layoffs in China involve almost all departments, and the layoff ratio in some departments is even much higher than 10%. In addition, on April 24, the topic of "Tesla was exposed to breaking the contract with fresh graduates" also appeared on Weibo hot search, and many netizens said on social platforms that they were unilaterally terminated by Tesla after getting the job offer.
On the call, another analyst asked Musk if he plans to exit Tesla, given that he runs numerous companies. Musk did not give an answer, but said he spends most of his time working, rarely even taking a Sunday afternoon off, and will work to ensure that Tesla is "very prosperous."
Reimagining the business landscape
At present, Tesla is increasing its investment in artificial intelligence (AI) and autonomous driving. Musk said that by the end of this year, Tesla will have 85,000 Nvidia H100 GPUs for training artificial intelligence. He stressed that Tesla is an artificial intelligence company.
For autonomous driving, Musk also made it clear that he was determined: "Even if aliens kidnap me tomorrow, Tesla will solve the problem of autonomous driving." "Tesla is scheduled to release Robotaxi on August 8, 2024. Musk also confirmed that Tesla is discussing FSD licensing with a car company. "We are in a conversation with a car manufacturer. He said. Tesla plans to provide its self-driving on-board computers and cameras to other automakers and license the software.
It can be seen that Tesla is reconstructing its business map through low-cost electric vehicles, autonomous driving, artificial intelligence, etc. "From 2019 to now, we have just experienced a long period of prosperity. Musk said on the call, "Now is the time to restructure the company for the next phase of growth." ”
Text: Zhang Dongmei Editor: Huang Xia Layout: Zhao Fangting
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