A combination of price cuts and lacking EV demand have caused the latest numbers in the Tesla earnings report to disappoint investors. Tesla’s profits fell 55% in the first quarter of 2024, with the company’s earnings being reported to have hit the lowest level in recent years.
However, Tesla stock is currently rallying following a promise by Elon Musk to produce an affordable EV next year, suggesting the future potential of the company remains to be seen.
Tesla Earnings Report
Tesla on Tuesday announced through its earnings report that Q1 earnings fell 47% while quarterly revenue was down 9% compared to Q1 2023.
When looking at earnings per share, the company posted a 45 cents per share number, the lowest point since Tesla reported 31 cents per share earnings in Q1 2021.
Delivery Tallies
In the earnings report, Tesla posted the lowest number of quarterly deliveries since Q2 2022. The deliveries tally in Q1 of this year was 386,810 which was lower than even some of the estimates analysts had ahead of the report.
In Q2 2022, Tesla’s quarterly deliveries only totaled 344,000.
Trending Down
Earlier in the month, Tesla reported its first year-over-year sales drop in four years, which has caused hesitation among analysts about the growth of the company.
Since the beginning of 2024, Tesla’s stock has fallen more than 40 percent. Just last week Tesla’s stock dropped 13 percent. The company has warned that it is anticipating 2024 growth the be “notably lower” than the previous year’s.
Company Layoffs
In another sign of trouble for the company last week, Tesla laid off over 14,000 employees which represent 10 percent of its total workforce.
A Bloomberg report speculates that the total layoffs will end up being closer to 20% by the time the layoff waves come to a close.
Downplaying Layoffs
Elon Musk made an X post on Tuesday while news of the layoffs was in the public spotlight. Musk emphasized the work that Tesla has done to create jobs in California, one of the places that is seeing worker layoffs.
“Tesla has now created over 30,000 manufacturing jobs in California!” Musk said in a post responding to himself speaking in a video at an event.
Stock Rally
However, despite recent downturns and news breaking of the disappointing earnings report Tuesday, stocks for the company rallied.
The stock rally earlier today has been attributed to Elon Musk’s promise to bring more affordable electric vehicle products to market, with a “Model 2.5” slated for release next year.
Price Cuts
Economic analysts are attributing the decline of Tesla’s earnings to several factors, one of them being price cuts to EV vehicles.
The company recently announced further price cuts in across the world and in places like China and Germany to follow the ones in the US market. These cuts come in a background of slowing electric vehicle demand with some customers preferring hybrid vehicles.
Elon Under Pressure
While Musk has acknowledged the pressure from flattening demand for EVs, he affirmed his belief that EVs will eventually come to dominate the market.
“EV adoption rate globally is under pressure and a lot of other auto manufacturers are pulling back on EVs and pursuing plug-in hybrids instead,” Musk said. “ We believe this is not the right strategy. And electric vehicles will ultimately dominate the market.”
Tesla’s Changes
Last week, Deutsche Bank analyst Emmanual Rosner commented that investors will need to come to terms with the current landscape of Tesla’s business.
“The stock will need to undergo a potentially painful transition in ownership base, with investors previously focused on Tesla’s EV volume and cost advantage potentially throwing in the towel,” Rosner said.
Elon in War Mode
On social media platform X, Musk liked a post by user Chris Zheng, signaling an agreement with the message behind it.
“I told you that Elon has re-entered wartime CEO mode. This scene is familiar to the veterans of the Tesla community. Today Elon decided to bet the entire company on Robotaxi. I don’t know if all in Robotaxi is right or wrong. I don’t have the answer,” Zheng wrote.
Tesla CFO Comments
In an attempt to reassure investors, the CFO of Tesla, Vaibhav Taneja, emphasized that they are looking ahead with positive expectations.
“The future is really bright,” Taneja said. “We just have to get through this period and get there.” Musk emphasized the importance of AI and autonomous vehicles in the future saying “We’re putting the actual ‘auto’ in ‘automobile.”
