Source: AFP
Tesla reported a big drop in quarterly earnings on Tuesday, pointing to increased pressure in the electric vehicle market that has led to deep cost cutting.
But shares of Elon Musk’s electric vehicle company rose after Tesla pledged to “accelerate” new more affordable cars – something Wall Street analysts have been raving about.
Tesla reported a profit of $1.1 billion, down 55% from the previous quarter on revenue of $21.3 billion, down 9%.
The results, which missed analysts’ estimates, come as investors have called for greater strategic clarity from Musk amid weaker performance and as Tesla’s mercurial boss has touted Robotaxis as a venture at a time when there is growing skepticism about autonomous technology.
The company, which recently announced job cuts, has also recalled its Cybertruck due to an acceleration problem.
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Tesla is committed to “reducing costs across the company” as part of an effort to achieve “profitable growth,” it said.
Despite the belt-tightening implied in those statements, Tesla’s report did provide some news that will likely excite investors, saying it planned to “accelerate the launch of new models ahead of the start of production we’ve already announced in the second half of 2025”.
The new vehicles will include “more affordable models,” Tesla said.
The statement comes after speculation that Tesla is scrapping plans for the “Model 2,” the unofficial name for what is expected to be a mass-market, lower-priced vehicle.
While Tesla’s announcements about new vehicles boosted shares, “the company has yet to offer a timeline for those new vehicles, which could take years to come to market at a time when EV competition in various markets is intensifying ” said Gadjo Sevilla, Senior Technical Analyst at Emarketer.
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Tesla shares rose 7.7 percent in after-hours trading.
Robotaxis?
Tesla also said on Tuesday that it will continue to pursue a “revolutionary” manufacturing strategy for a “custom-designed robotaxi product.”
Sevilla warned against the venture, saying that “entering the emerging segment of autonomous robo-taxis in an era that is being scrutinized for safety could be another mistake for Tesla, especially considering that it has had its share of concerns and inquiries about the safety”.
Heading into 2024, Tesla watchers were already bracing for a tougher ride, with Musk’s once-dominant leadership in EVs facing more competition from rivals, resulting in a series of price cuts.
But things were more uneven than expected.
After disclosing on April 2 a disappointing 8.5 percent drop in first-quarter deliveries, Tesla last week announced plans to lay off more than 10 percent of its workforce.
That news quickly followed Tesla’s plan to revive a $56 billion compensation package for Musk after a court rejected it.
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Then, late last week, Tesla announced a recall of its Cybertruck due to an acceleration problem.
Source: AFP