Tesla’s net profit plummeted by 55% in the first quarter and will launch new models before 2025

After hours on April 23rd, Tesla announced its first quarter results, with revenue down 9% year-on-year, the largest year-on-year decline since 2012. However, Musk stated that the company plans to start producing new models before 2025, which has driven Tesla’s post market stock price up more than 12%. Since the beginning of this year, Tesla’s stock price has fallen by more than 40%.

Tesla is facing fierce competition in the global electric vehicle market, and recently the company has comprehensively lowered the prices of electric vehicles and autonomous driving software worldwide to stimulate demand.

In the first quarter of this year, Tesla’s revenue was $21.3 billion, a year-on-year decrease of 9%, which even exceeded the sales decline caused by production interruptions during the pandemic; Net profit decreased significantly by 55% from $2.5 billion a year ago to $1.1 billion; Gross profit decreased by 18%.

Multiple factors have led to a significant decline in Tesla’s profits, mainly due to Tesla’s price reduction in the fierce electric vehicle price war, especially the intensified competition in the Chinese market, which supports Tesla’s sales, resulting in a downward trend in Tesla’s sales. In addition, the Red Sea crisis in the first quarter also affected Tesla’s logistics and led to an increase in operating costs. Musk said that the situation in the second quarter may improve.

Meanwhile, capital expenditure increased by 34% to $2.77 billion. Tesla attributed the increase in expenses to a $1 billion capital expenditure on “artificial intelligence infrastructure.”. Tesla is actively purchasing artificial intelligence chips to train its autonomous driving model.

Earlier this month, Tesla announced a year-on-year decrease of 8.5% in car deliveries in the first quarter. Tesla expects that the sales growth rate in 2024 may be significantly lower than the growth rate in 2023.

However, in order to boost the confidence of the capital market in Tesla, Musk stated during the earnings conference call that the company plans to start producing new models, including cheaper electric vehicles, in early 2025 or even by the end of this year. Previously, it was reported that Tesla had abandoned the development of a low-cost model called the Model 2 and turned to the development of the autonomous taxi Robotaxi.

At the financial report meeting, Tesla presented a screen based on Robotaxi ride services. Musk also stated that Tesla is in negotiations with a major automaker regarding the licensing of its assisted driving system.

To reduce costs, Tesla has launched a large-scale personnel adjustment worldwide this month, which will lay off more than 10% of its employees worldwide. The first financial reporter learned that Tesla’s layoffs in China involve almost all departments, and some departments even have a layoff rate far exceeding 10%.

Musk was asked during the earnings conference call if he plans to leave Tesla, considering that he already owns multiple companies and may be distracted. He did not provide an answer, but stated that he spends most of his time working, even rarely resting on Sunday afternoons, and will strive to ensure Tesla’s sustained growth.

The latest disclosed data shows that Tesla will cut 2688 jobs at its headquarters in Austin, Texas and 3332 jobs in California. According to the filing documents, as of December 2023, the total number of Tesla employees exceeded 140000.