Tesla to speed up launch of new models as revenues decline | Business News

April 23, 2024 TruthUSA

Tesla’s quarterly revenue has dropped for the first time in almost four years, according to financial result filings, demonstrating why the electric carmaker is cutting prices further along with its cost base.

The company, founded and run by Elon Musk, reported revenues of $21.3bn over the first three months of the year, its first quarter.

That was down 9% on the $23.3bn sum achieved in the same period last year.

However, Tesla shares – down by around 40% over the year to date – were 6% higher in after-hours trading.

That was mostly explained by an announcement that the promised launch of new models was being “accelerated” from the second half of 2025.

Tesla had previously revealed that deliveries of vehicles had fallen 9% to 386,810 over the quarter.

The company then had partly blamed disruption on shipping in the Red Sea and an arson attack at a factory in Berlin.

‘Global EV sales under pressure’

Tesla added on Tuesday: “Global EV sales continue to be under pressure as many carmakers prioritise hybrids over EVs.”

“While positive for our regulatory credits business, we prefer the industry to continue pushing EV adoption, which is in-line with our mission.

“To support our growth, we have been increasing awareness and expanding vehicle financing programs, including attractive leasing terms for our customers.”

The world’s most valuable carmaker by market capitalisation has been struggling with soft demand for its electric vehicles since last year, with industry commentators pointing to continued concern among consumers about EV journey ranges.

Other challenges have included the squeeze on consumer budgets from inflation and the impact of higher interest rates across much of the western world.

Threat from China

Tesla has cut prices significantly several times, including just last week, in a bid to woo buyers at the expense of profitability.

But its efforts have been hampered by strong competition, mainly from China, that is looking to undercut Tesla.

The California-based firm is also seen by analysts to be at a disadvantage due to the lack of a low budget model.

The Reuters news agency reported weeks ago that plans for its cheapest model to date had been dropped.

There was no further information on what was due to enter the production lines in the results filing.

Tesla job cuts

Analysts have also questioned how Musk manages to grapple pressures on his time across his extensive interests, which also include X and SpaceX.

Earlier this month, Musk moved to invest more in Tesla through a programme of cost reductions that included 15,000 job losses.

It equated to more than 10% of the total workforce.

“We have updated our future vehicle line-up to accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025,” the company said.

“This update may result in achieving less cost reduction than previously expected but enables us to prudently grow our vehicle volumes in a more capex efficient manner during uncertain times.”

The savings, aimed at bolstering productivity, may also go some way towards quality control amid complaints from some customers about basic defects.

There was negative press last week when regulators revealed a recall covering more than 3,700 Cybertrucks over concerns the accelerator pedal could become stuck.

The problem has been linked to a simple covering on the pedal itself.

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