- Tesla reported a 9% drop in revenue in the first quarter of 2024, the biggest decline since 2012, missing analysts’ estimates due to the impact of ongoing price cuts.
- The company announced plans to accelerate the launch of new, more affordable models that can be produced on the same manufacturing lines as its current lineup, aiming to fully utilize its current production capacity.
- Tesla’s stock rose about 8% in extended trading after the earnings report, despite concerns about weak deliveries, competition in China, and the company’s ongoing price cuts.
Tesla reported its first quarter 2024 earnings on Tuesday, revealing declining revenues and missed earnings estimates as the electric vehicle maker contends with price cuts and slowing demand.
Financial Results
The company posted an adjusted earnings per share of 45 cents, falling short of analyst expectations of 51 cents per share. Revenue dropped 9% year-over-year to $21.3 billion, missing estimates of $22.15 billion. Net income plunged 55% to $1.13 billion compared to a year earlier.
Revenue Declines
The revenue decline of 9% is Tesla’s steepest drop since 2012 and comes as the company has lowered prices throughout the start of 2024 to try to spur demand. Automotive revenue specifically sank 13% versus last year to $17.34 billion.
Outlook
In its report, Tesla reiterated a gloomy view for 2024, telling shareholders “volume growth rate may be notably lower than the growth rate achieved in 2023.” The downbeat guidance comes as Tesla faces slowing EV sales growth globally and rising competition.
Stock Impact
Tesla shares have fallen over 40% so far this year on weak delivery numbers, competition concerns, and price cuts. The stock rose about 8% after hours Tuesday following the earnings release.
New Vehicle Plans
Despite troubles, Tesla said it is accelerating the launch of new and more affordable models to utilize its current factories before building new ones. The company wants to achieve over 50% production growth in 2024 compared to 2023.
Revenue Details
Revenue from Tesla’s energy business climbed 7% to $1.64 billion, while services and other sales were up 25% at $2.29 billion. But gross profits dropped 18% amid lower automotive margins from price reductions.
Full Self-Driving Revenue
Tesla was able to recognize some deferred revenue from sales of its Full Self Driving software, boosting automotive sales figures. Analysts estimate this added roughly $700 million in revenue in the quarter.
Restructuring Efforts
Earlier in April, Tesla embarked on a restructuring involving major layoffs. The effort included two executives leaving the company and Musk announcing a 10% cut to the workforce.
Cash Flow and Expenditures
Free cash flow swung to negative $2.53 billion compared to positive cash flow a year ago. Tesla blamed higher inventory and capital expenditures. Capital spending itself rose 34%.
Conclusion
The first quarter results reveal an automaker facing serious headwinds and adjusting its operations in hopes of reviving growth and profits. With stiff competition in the EV space, Tesla will likely continue discounting vehicles and reining in costs as it aims to meet its 2024 production targets.
