Tesla to Speed Up New Product Releases Following a 55% Drop in Q1 Net Income to $1.1 Billion
Tesla Q1 Earnings: Income Plummets 55% and Revenue Dips 9%
In its first-quarter earnings report, Tesla revealed that new vehicles, including those with more affordable price tags, would use elements from the next-generation platform along with features from current designs.
On Tuesday, Tesla's quarterly earnings call was full of surprises. Elon Musk was tight-lipped about upcoming product releases, skirting questions on whether Tesla was planning to launch a low-cost car priced at around $25,000. Tesla shared that their Q1 net income dropped by a whopping 55% to $1.1 billion, with revenue taking a 9% hit, now at $21.3 billion. The drop in income can be traced to falling electric vehicle deliveries worldwide.
During the same call, Musk remained vague about future product details, sidestepping speculation over the rumored low-cost vehicle. However, he did mention that upcoming products would be built on the same manufacturing lines as current models, implying an acceleration in the production schedule. He would not confirm or deny if a Robotaxi or 'Cybercab' will be revealed in August.
The stock market, however, took the news well, with Tesla's shares bouncing back 13% during after-hours trading on Tuesday, hitting $163.96. But the first-quarter report wasn't all roses. Tesla’s gross margin shrank to 17.4% from 19.3% compared to last year's numbers. Adding to the internal shake-up, Tesla’s VP of Investor Relations, Martin Viecha, resigned. He took to X to announce his departure, stating he’d remain a loyal supporter and shareholder despite his departure.
On the brighter side, Tesla's push toward new products seems more promising. The automaker said it would fast-track the launch of new models ahead of their original timeline in the second half of 2025. Yet, Musk provided little to no additional detail on the kinds of vehicles in the pipeline. When pressed for more clarity on this point, he was dismissive, saying he wouldn't comment further.
Investor sentiment on Tesla has been mixed. Analysts were expecting a bumpy ride due to an 8.5% decrease in first-quarter deliveries, marking the first drop since 2020. They had hoped Musk would provide a clearer path forward, especially with rumors swirling about the cancellation of a low-cost vehicle program. However, Musk hinted that Tesla's long-term success would rely heavily on advancing autonomous driving technology and developing a robotaxi service. "In the future, gasoline cars that are not autonomous will be like riding a horse and using a flip phone," he commented.
Additionally, in response to market pressures, Tesla announced price cuts for its vehicles in key markets. In the U.S., most models saw a $2,000 reduction. The Model Y crossover, Tesla's bestseller, now starts at $44,630 with shipping, making it eligible for a $7,500 federal tax credit. The company also dropped the cost of its Full Self-Driving software package from $12,000 to $8,000, suggesting they are strategically positioning for broader market penetration.
Despite these cost adjustments, the recent departure of key executives and price slashes has made some investors wary. But Tesla remains steadfast in its commitment to innovation and continues to prioritize growth in its pursuit of reshaping the automotive industry.
