Achi news desk-
Tesla’s first-quarter net income plunged 55 percent as global sales declines and price cuts cut into the electric vehicle maker’s revenue and profit margins.
The Austin, Texas company said it made US$1.13 billion between January and March compared with $2.51 billion in the same period a year ago.
Revenue was $21.3 billion, down nine percent from last year as global sales fell nearly nine percent due to increased competition and sluggish demand for electric vehicles. Tesla also blamed an arson attack for its plant and factory downtime in Germany as it switched factories to an updated version of the Model 3 sedan.
Excluding one-time items such as stock-based compensation, Tesla made 45 cents a share, missing the analyst estimate of 49 cents, according to FactSet.
The company’s gross margin, which is the percentage of revenue it gets to keep after expenses, fell again to 17.4 percent. A year ago it was 19.3 per cent, and it reached a peak of 29.1 per cent in the first quarter of 2022.
Tesla said in a letter to investors on Tuesday that its vehicle sales growth “may be significantly lower” than last year as it works on the launch of its next-generation vehicle and other undisclosed products.
The next generation vehicle is likely to be the small Model 2, which is expected to cost around $25,000 and give Tesla more appeal to mass market buyers. It was unclear whether the company would continue to pursue that car.
The company also appears to be counting on a vehicle built to be a fully autonomous robotaxis as a catalyst for future earnings growth. CEO Elon Musk has said that the robotaxi will be unveiled on August 8.
Tesla shares rose 5.2 percent in trading after the closing bell Tuesday, but are down more than 40 percent this year. The S&P 500 index is up about five percent.
Investors and analysts will be looking for more specific answers from Musk on an earnings conference call later Tuesday. Many analysts say the drop in sales raises questions about demand for Teslas and other electric vehicles.
Musk has been touting the robotaxi as a growth catalyst for Tesla since the hardware for it went on sale in late 2015. He has called the system “Full Self Driving,” although the company says on his website that he cannot drive himself. and humans must always be ready to take control.
In 2019, Musk promised a fleet of autonomous robotaxis by 2020 that would bring income to Tesla owners and make their car values ​​appreciate. Instead, they have declined with price cuts, as the autonomous robotaxis has been delayed year after year in owner testing as the company collects road data for its computers.
Industry analysts are skeptical, and fear that Musk has canceled or delayed plans for the Model 2.
Over the weekend, Tesla cut $2,000 off the price of the Model Y, S and X in the US and is said to have made cuts in other countries including China. It also cut the cost of “Fully Self Drive” by a third to $8,000.
In a note to investors on Monday, Bank of America Global Research analyst John Murphy wrote that Tesla shares have been under pressure since the start of the year due to weaker EV sales, and production outstripping demand.
“We remain somewhat skeptical of Tesla’s growth prospects, but we also see opportunities as the company will reveal future growth drivers (robotaxi and Model 2) in the coming months,” Murphy wrote, adding that maintains a neutral rating on the stock.
On Sunday, Musk wrote on X, the social media platform he owns, that Tesla’s prices, like other automakers, change frequently “to match production with demand.”
Between January and March, Tesla produced 433,371 vehicles and delivered 386,810, making over 46,000 more than it sold. This is even after it cut prices last year on some of its more expensive models by up to $20,000.
Last week, Tesla announced it would cut 10 percent of its 140,000 employees, and key executive Andrew Baglino, senior vice president of powertrain and energy engineering, announced his departure after 18 years. The company also announced that it would ask shareholders to restore a $56 billion pay package for Musk that was rejected by a Delaware court.
Murphy wrote that on Tuesday he expected Musk and the company to give some hints about the robotaxi, and he could also reiterate an intention to start making the Model 2 in 2025 or 2026.
For years, Musk has told owners and investors that Teslas with “Full Self Driving” software and hardware will be able to drive themselves and could earn money for transporting passengers when they would normally be parked.
But “Full Self-Driving” has so far been nothing more than a partially automated driver assistance system that can’t drive itself.
Early last year, the National Highway Traffic Safety Administration made Tesla recall its “Full Self-driving” system because it can misbehave around intersections and doesn’t always follow speed limits. Tesla’s less sophisticated Autopilot system was also called upon to strengthen its driver monitoring system.
However, some experts don’t think any system that relies entirely on cameras like Tesla’s can achieve full autonomy.
