Tesla's Q1 Earnings 'Below Expectations'
Plan to Accelerate Launch of Affordable Electric Vehicles
U.S. electric vehicle company Tesla's revenue has declined at the fastest rate in 12 years. Despite earnings falling short of expectations, Tesla's stock price surged more than 7% in after-hours trading following the announcement of an expansion in the launch of low-priced electric vehicles.
On the 23rd (local time), Tesla announced that its first-quarter revenue this year decreased by 9% year-on-year to $21.3 billion, and net profit dropped by 55% to $1.13 billion during the same period. Adjusted earnings per share (EPS) were reported at $0.45.
This performance fell short of analysts' expectations. Earlier, LSEG had estimated Tesla's revenue at $22.15 billion and adjusted EPS at $0.51.
Tesla's first-quarter revenue declined by 9%, marking the largest drop since 2012. The revenue decline was steeper than in 2020, when production was halted due to the COVID-19 pandemic. Tesla's vehicle sales revenue in the first quarter was $17.34 billion, down 13% from a year earlier.
Tesla's poor performance was anticipated. Due to supply chain instability, factory shutdowns, and competition from Chinese rivals, Tesla's vehicle deliveries in the first quarter fell by 8.5% year-on-year, marking the first contraction in four years since 2020.
Tesla also announced plans to accelerate new vehicle launches, including low-priced electric vehicle models.
Tesla stated, "These models will be produced through existing production lines," adding, "Before investing in new production lines, we aim to fully utilize current production capacity and increase production volume by about 50% compared to 2023."
Struggling with sluggish electric vehicle sales, Tesla recently reduced prices of existing electric vehicles in the U.S. and China. The company also announced plans to cut 10% of its global workforce. As of the end of 2023, Tesla employed 140,000 people worldwide, meaning over 14,000 employees are targeted for layoffs. Amid growing concerns about Tesla's growth prospects, CEO Elon Musk has even revealed plans to unveil the robo-taxi, which had only been mentioned in product development plans until now, in August.
In the market, although the electric vehicle market growth has slowed due to high inflation and high interest rates, Tesla is seen as rapidly losing market dominance compared to companies like China's BYD, which is increasing sales volume. As a result, Tesla's stock price has fallen 40% so far this year.
Meanwhile, Tesla's stock price rose 1.8% during regular trading hours on the day and surged more than 7% as of 4:43 p.m. Investors are focusing on the plan to sell low-priced electric vehicles rather than the poor earnings, leading to a buying spree.
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