Tesla’s profits took a sharp downturn in the first quarter of 2024, plummeting 55% compared to the same period last year. The electric vehicle (EV) manufacturer reported $1.13 billion in net income, attributing the drop to persistent price cuts, supply chain disruptions, and growing competition from hybrid vehicles.
The company’s revenue for the quarter stood at $21.3 billion, down 9% year-over-year, a noticeable dip that reflects the growing challenges in the EV sector. These challenges include a notable shift in consumer preferences towards hybrid vehicles as opposed to full electric models, putting pressure on EV sales. The company also cited the Red Sea conflict and disruptions at Gigafactory Berlin due to an arson attack as additional factors impacting production and revenue.
“We are witnessing a significant shift in the automotive market, with a growing number of automakers embracing hybrids,” said Tesla CEO Elon Musk during the earnings call. “This trend places pressure on EV sales, but we remain committed to the all-electric future and are investing heavily in next-generation platforms.”
Despite the decline in profits, Tesla shares saw a rebound in after-hours trading, rising by 12% following the company’s forward-looking announcements. Investors seem optimistic about Tesla’s ambitious plans for 2025, which include the introduction of a new, cost-effective vehicle lineup. Musk highlighted that the new platform would allow for the production of more affordable EVs, aiming to attract a broader customer base.
“We believe the market will ultimately lean towards electric vehicles, and our strategy is to lead that shift,” Musk stated. “Our upcoming product roadmap will feature models that are both affordable and innovative, designed to accelerate EV adoption worldwide.”
The continuous price cuts, aimed at boosting sales, have had a noticeable impact on Tesla’s profitability. Although the company sold a record-breaking 1.8 million vehicles in 2023, it has struggled to maintain the same momentum in the first quarter of 2024, with vehicle deliveries dropping 20% compared to the previous quarter.
“The cost of our price cuts is evident, but it’s a necessary step in making EVs more accessible to the masses,” Musk explained. Despite the downward trend in automotive revenue, Tesla saw growth in its energy storage and services segments, with energy storage deployments reaching a record 4.1 GWh.
While Tesla’s future plans are promising, the company faces additional delays with some of its existing projects, notably the Tesla Semi, which is now slated for mass production in late 2025.
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