Earlier, Tesla's stock price went all the way down, even falling around 30%, but it has recently risen sharply after the EV giant released its Q1 earnings and revenue report on April 23. As CEO Elon Musk seems determined to restructure the company for the "next" phase of growth. While Tesla's first-quarter earnings and revenue were both lower than expected on the evening of April 23, investors didn't seem to care, and Tesla's shares rose 12% the next day after Musk said a "more affordable" new model was about to be launched.
Musk also predicted higher car deliveries in 2024 and emphasized Tesla's focus on Full Self-Driving (FSD) during the earnings call. Tesla shares had fallen more than 17% in April ahead of the Q1 earnings report and hit a 52-week low of $138.80 on April 22. Investor sentiment seems to be subdued. However, Tesla's stock price began to rise immediately after the release of its first-quarter results. As of May 2, Tesla shares are up 24% since April 23. Faced with a complex market environment, Tesla began to adjust its strategy. Tesla's leadership has historically stepped up when they are in a desperate situation. As the company enters the adjustment phase of its strategic lifecycle, Tesla will become more cautious, but at the same time aggressive in new areas.
Major layoffs in Tesla's charging division
As reported on April 30, Musk decided to fire two executives while cutting the EV company's entire high-voltage charging layout team. According to The Information, citing internal emails, Musk fired Rebecca Tinucci, senior director of Tesla's Supercharging program, and Daniel Ho, head of the new car program. The report also said that the Tesla CEO is cutting the team led by the two executives and firing its public policy staff. Musk reportedly wrote in an email: "Hopefully these actions are a clear indication that we need to be absolutely central in terms of headcount and cost cutting." "While some executives are taking this seriously, most haven't done so yet. ”
Musk wrote on X (formerly Twitter) that Tesla "still plans to grow the Supercharger network, just at a slower pace with new locations, focusing more on 100% uptime and expansion of existing locations." Troy Teslike, a well-respected source of delivery estimates and Tesla data tracking among Tesla's retail investors, posted on X that Musk's decision to disband the Supercharger team "seems impulsive and hasty." "By letting them go, Tesla risks losing valuable expertise that could take years to rebuild," Tayslick wrote. ”
Previously, Elon Musk decided earlier this month to lay off more than 10% of Tesla's global workforce in preparation for the "next phase of growth". Drew Baglino, senior vice president of powertrain and energy, and Rohan Patel, vice president of public policy and business development, both left Tesla around the time of the layoffs. At the same time, Reuters has received a response from companies such as General Motors and Ford, which, like several other automakers, want to adopt Tesla's charging standard (NACS), and now the fruits of Tesla's original efforts have been retained. Tesla deployed a record number of Superchargers last quarter and currently operates 57,579 Superchargers in 6,249 locations worldwide.
Tesla withdrew from the next-generation "Gigacasting" manufacturing process
There are widespread concerns that Tesla is shifting from actually building cars to a focus on artificial intelligence and autonomous driving, and a new report suggests that the company may also abandon a breakthrough manufacturing technology that was once used to make the next generation of electric vehicles. Tesla earlier promised to improve Gigacasting, and the entire auto industry is racing to catch up. Last year, Toyota showcased its first foray into the technology, all of which is designed to help bring EV manufacturing costs on par with Tesla's, as well as a new batch of Chinese automakers, all of which are producing EVs at breakneck speeds, and the technology has helped with production efficiency.
According to Reuters, Tesla has canceled plans to use a new generation of "Gigacasting" in its future products. Earlier, the company was working on a plan to make the entire underbody of its next-generation car into a single piece. Tesla has been a leader in the field of gigacasting, a cutting-edge technology that uses large presses with thousands of tons of clamping pressure to die cast large portions of the underbody of a car. On a typical vehicle, the underbody may be made up of hundreds of individual parts.
Reuters reported last month that the rumored Tesla Model 2 had in fact sunk into the water. Of course, Musk immediately hinted on his social media platform that the global news outlet was lying, but failed to quell the rumors. Regarding Tesla's decision to suspend the manufacturing process, it is another heavy blow to the prospect of Tesla selling for less than $25,000. Streamlining the manufacturing process while reducing the price of batteries and components is key to achieving this goal in order to sell more electric vehicles to the masses.
The Tesla newspaper said it has updated its "future car lineup to accelerate the launch of new models before we previously announced that production will begin in the second half of 2025." The new vehicles include "more affordable models" and will "leverage aspects of the next-generation platform as well as the technology of our current platform". Tesla says it can produce these new cars on the same production line as the current vehicle lineup. Musk added on the earnings call that the new model series will be launched in early 2025 "if not later this year." Executives declined to give further details about the company's plans for low-cost vehicles.
Dan Ives, an analyst at Wedbush Securities who has long been bullish on Tesla, wrote that it appears that Tesla will launch a "Model 2.5" instead of a Model 2.
"While it's not the next-generation Model 2 platform, we believe it's the right strategy and it's taking action at the right time," Ives said after the earnings release. ”
There is a greater focus on artificial intelligence, autonomous driving, and robotics
In recent weeks, Musk and Tesla have been stepping up rhetoric about full self-driving and artificial intelligence. This message was amply reflected in the company's first-quarter earnings call. Tesla recently transitioned its Full Self-Driving from FSD Beta to a supervised FSD. According to regulatory filings, the EV giant reported that it would recognize $281 million in deferred revenue by the end of the first quarter.
Musk said on the earnings call: "The way to think about Tesla is almost entirely to solve the problem of self-driving and be able to enable self-driving for a huge fleet of vehicles." He later added, "If someone doesn't believe Tesla will solve the problem of self-driving, I don't think they should be an investor in the company." ”
On April 28, Musk doubled down on X (formerly Twitter) that Tesla will spend about $10 billion in 2024 on "artificial intelligence that combines training and inference, the latter primarily for cars." "Any company can't compete if it's spending at that level and it's not efficient," Musk said. ”
The Tesla CEO also confirmed on the Q1 earnings call that the company will "showcase" its Cybercab on Aug. 8, when more of a low-cost car will be discussed.
The company also said it will "continue to increase" its AI infrastructure capabilities in the "coming months" and is currently developing ride-hailing features that are "available in the future". At the same time, it is reported that Tesla will use the advanced assisted driving map (Gaofu map) provided by Baidu Maps for the Chinese version of FSD (Full-Self Driving) landing.
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"We should be seen as an AI robotics company," Musk said. "If you think of Tesla as a car company...... That's just the wrong frame. "With traditional automakers racing to develop, produce and sell more affordable mass-market EVs, and the ongoing threat of price cuts from Chinese automakers, it feels like Tesla is losing ground in the EV market, and Musk has set his sights on the next lucrative endeavor, adjusting his strategy to ensure Tesla remains profitable. Musk's trip to China was a "home run". Tesla's ability to win FSD approval in China is a "watershed moment in Tesla's story."
In the first quarter, Tesla sold 132,420 vehicles in China, accounting for about 34% of its global deliveries. Tesla also sold 89,064 Chinese-made vehicles in March, of which 26,666 were exported, according to the China Passenger Car Association (CPCA). From this point of view, Tesla's strategic adjustment must also be carried out on the basis of China.