Tesla in the doldrums after a disastrous first quarter – Technologist

Tesla reported a 9% decrease in year-on-year revenue in the first quarter, totaling $21.3 billion (€20 billion). Net income was also down more than expected, dropping by 55% to $1.1 billion. Additionally, the company experienced negative cash flow and a reduction of cash reserves by $2.5 billion to $26.8 billion. Car deliveries also decreased by 8.5% compared to last year. Despite these challenges, Wall Street clung to Tesla’s promise to launch more affordable models in 2025, to send stock prices soaring. Shares, which fell more than 40% since the start of 2024, jumped 10% – to around $160 – in after-hours trading following the market close on Tuesday, April 23.

After a disastrous quarter, the stock exchange is keen to believe in Elon Musk’s lucky star, having previously made their fortune. However, he is going through as difficult a time as in 2018, when his company, struggling to move into mass production, came close to bankruptcy. The head of the American car manufacturer repeated to financial analysts on Tuesday that he believed the electric vehicle still represented the future.

He announced that his new products would be “made on [his] current production lines much more efficiently,” without the need to create a new factory. Moreover, he wanted to make people dream about autonomous driving and robot cabs thanks to artificial intelligence (AI). “If somebody doesn’t believe Tesla is going to solve autonomy, I think they should not be an investor in the company,” the executive ruled. “While many are pulling back on their investments, we are investing in future growth,” Tesla said in a statement. “The future is not only electric, but also autonomous.”

Mass layoffs

It was an optimistic speech, which Musk delivered with difficult elocution – as is often the case – but also one needed by the company. The first quarter of 2024 was catastrophic for the brand as it grappled with fierce competition from electric vehicles in the global market. It had to slash prices and sacrifice margins, including in China, in order to retain market share and benefit from public subsidies that did not apply to overpriced models. In addition, it suffered from shipping disruptions in the Red Sea and the shutdown of its Berlin plant, which was the target of an arson attack in early March.

Deliveries of its futuristic vehicle, the Cybertruck, are struggling to ramp up due to technical production difficulties at the Austin, Texas plant. The company has had to recall 3,900 units. The automaker is also affected by Musk’s political antics, who is drifting toward the far-right when his vehicles are supposed to appeal to environmentally-conscious urbanites. Admittedly, he controls more than half of the American market, but this is a sharp drop from the 75% he controlled just two years ago. Finally, Musk’s $56 billion compensation package has been nullified by a Delaware judge and shareholders will have to vote on whether or not to renew it.

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