Tesla reported a staggering 55% drop in profits for the first quarter. As profits continue to plunge, CEO Elon Musk announced a major shift in the company’s product roadmap.
The electric vehicle (EV) giant boldly promised to launch more affordable models as early as next year. Tesla will also be doubling down on its fully autonomous Cybercab concept. The announcement of new ventures sent the company’s stock soaring.
In March, Wells Fargo downgraded Tesla’s stock price target from 200 to 125. At the time, Tesla stock was down by 4.5%, closing at $169.50.
Tesla’s revenue dip
Tesla’s “worse-than-expected” earnings call on Tuesday was the lowest it’s been since 2021, with a 55% drop in profits and a 9% decline in revenue for the first quarter. However, stocks soared the following day when Musk explained Tesla’s next-generation platform and robo-taxi.
While the company’s Q1 earnings fell 47% to 45 cents per share, its quarterly revenue came to $21.3 billion – down 9% from the same period last year. Tesla claims the plunge was mainly due to a reduced average vehicle selling price, as well as a drop in overall vehicle deliveries.
A billion out, a billion in: With the company spending approximately $1 billion on artificial intelligence (AI) infrastructure, its free cash flow was negative $2.5 billion in Q1. Executives expect a positive upturn during Q2 as Tesla stands to save approximately $1 billion after recent layoffs.
Announcing the layoffs in a company-wide email, Musk said at the time: “There is nothing I hate more, but it must be done. This will enable us to be lean, innovative, and hungry for the next growth phase cycle.”
New product roadmap
Musk deflected from the plunging profits by wooing investors with Tesla’s AI ventures and the fully autonomous cybercab. The robo-taxi will be showcased on 8 August 2024. Musk didn’t share more, simply saying: “I think we’ve said all we will on that front.”
New vehicle models are also on the horizon, but Musk declined to provide additional information beyond saying production will begin in 2025. He did say the vehicles would be “more affordable.” As reported by Reuters earlier this month, Tesla is scrapping its Model 2 plans as competition from Chinese manufacturers heats up.
Locate2u previously reported that the Guangzhou-based competitor XPeng’s expansion plans would challenge Tesla, while Huawei was taking a bold leap into the EV charging sector with its ultrafast chargers boasting a 1-km-per-second charging range.
ALSO READ: Fast EV charging: Huawei takes on Tesla in China
Then there’s the company’s humanoid robot, Optimus, which according to Musk will be in Tesla’s factory by the end of this year, and ready for production by the end of 2025. Musk believes Optimus “will be more valuable than everything else combined.”
“Tesla is best positioned of any humanoid robot maker to be able to reach volume production … There’s no company even close to the inference efficiency of Tesla,” Musk says.
Image credit: Flickr/Niall Kennedy
About the author
Cheryl has contributed to various international publications, with a fervor for data and technology. She explores the intersection of emerging tech trends with logistics, focusing on how digital innovations are reshaping industries on a global scale. When she's not dissecting the latest developments in AI-driven innovation and digital solutions, Cheryl can be found gaming, kickboxing, or navigating the novel niches of consumer gadgetry.
