The manufacturer Tesla announced on Tuesday a 55% drop in its net profit in the first quarter, suffering in particular from increased competition and an electric vehicle market still “under pressure”, while the markets are worried about the strategic path which he intends to borrow.
Over the first three months of the year, the electric vehicle specialist achieved a turnover of $21.30 billion (-9% year-on-year) and a net profit of $1.30 billion.
This is lower than market expectations, which however did not hold it against it: its action jumped 8.59% in electronic exchanges after the closing of the New York Stock Exchange.
But its market capitalization has fallen by almost 40% since the start of the year. Particularly during April, when Tesla was omnipresent with sporadic, sometimes enigmatic official announcements, and lots of leaks and speculation in the press.
In particular: layoff of around 10% of the global workforce, disappointing deliveries and production in the first quarter, price reductions, presentation of a robotaxi — 100% autonomous —, recall of futuristic Cybertruck pick-ups, or even possible abandonment of a low cost vehicle.
“Everyone is waiting for what Elon Musk is going to say” on Tesla’s strategy, on its new products or even on the situation in China, Stephanie Valdez Streaty, director of “Industry Insight” at AFP, explained to AFP on Monday. Cox Automotive. “They need to tell us what their plan is,” she added.
Tesla lifted a corner of the veil in its press release, saying it had invested $2.8 billion in the first quarter in its artificial intelligence infrastructure, its production capacities, its network of Superchargers and its new production infrastructures.
He also talked about future advances in autonomy and the release of new models – including “cheaper” ones – sooner than he expected. It previously anticipated a production launch in the second half of 2025.
By then, volume growth in 2024 should be “notably lower” than in 2023, he warned.
Strategy
But the markets are especially waiting for Elon Musk to speak during an audio conference with analysts early in the evening.
Regarding the layoffs, which are expected to affect a total of around 14,000 people out of the group’s 140,000 employees – but he did not confirm these figures – Tesla was legally forced to provide details.
It informed the Texan authorities on Monday of the dismissal, from June 14, of 2,688 employees at its mega-factory in Austin, according to a notification sent to AFP on Tuesday.
In addition to a less dynamic electric vehicle market than expected in the United States, Tesla is also facing difficulties in China with strong competition from local manufacturers, including internationally.
BYD thus snatched the title of world’s largest seller of electric vehicles in the fourth quarter.
But the honor is safe: the Tesla Model Y was the best-selling car in the world in 2023, a first for an electric vehicle.
But, between January and March, the manufacturer delivered fewer vehicles than a year earlier and, above all, much fewer than expected by analysts. Production also disappointed, with a decline of 8.5% over one year.
“Revive demand”
According to JPMorgan analysts, Tesla stocks have never been higher.
This is undoubtedly the reason for the price cuts initiated this weekend in Europe, the United States and China.
They “aim to revive demand and reveal that the weakness in demand is not over,” said Bank of America analysts in a note on Monday.
These price reductions should weigh on margins. Especially since Tesla has made several in the United States in 2023 to make its vehicles more affordable in a context of high inflation and rising interest rates.
According to Factset, the average price for all models combined was $42,110 in the first quarter (before the weekend drops), compared to $46,000 a year earlier.
For analysts, Tesla could find a second wind with a low-cost vehicle called “Model 2” – around $25,000.
The press reported at the beginning of April that the group had given up, which Elon Musk seemed to half-heartedly deny. On Tuesday, the group confirmed that it was indeed in the pipeline.
Price “is one of the biggest obstacles. The sector needs more products under $30,000,” noted Ms. Valdez Streaty.