Tesla Shares Surge 11% Following Musk’s Announcement of Company’s Aim to Begin Production of Affordable New EV by Early 2025
WhatsApp Group
Tesla reported a 9% drop in first-quarter revenue on Tuesday, marking the most substantial decline since 2012, and missed analysts’ estimates, as the electric vehicle company grapples with the effect of ongoing price cuts. The stock surged in extended trading after CEO Elon Musk informed investors that production of new affordable EV models could begin sooner than anticipated.
The company’s earnings per share were reported at 45 cents adjusted, compared to the expected 51 cents, while revenue was recorded at $21.30 billion, falling short of the anticipated $22.15 billion. This represents a decrease from $23.33 billion a year earlier and from $25.17 billion in the fourth quarter. Net income plummeted by 55% to $1.13 billion, or 34 cents a share, from $2.51 billion, or 73 cents a share, a year ago.
The decline in sales was even more pronounced than the company’s last drop in 2020, which was due to disrupted production during the Covid-19 pandemic. Tesla’s automotive revenue decreased by 13% year over year to $17.38 billion in the first three months of 2024. During the call, Musk announced that the company plans to commence production of new models in “early 2025, if not late this year,” after previously expecting to begin in the second half of 2025. Musk also highlighted Tesla’s investments in artificial intelligence infrastructure and mentioned that the company is in discussions with “one major automaker” to license its driver assistance system, marketed in the U.S. as the Full Self-Driving, or FSD, option.
In its shareholder deck, Tesla restated a pessimistic outlook for 2024, informing investors that the “volume growth rate may be notably lower than the growth rate achieved in 2023.” Prior to the 11% surge after hours, Tesla shares had plummeted more than 40% this year, hitting their lowest since January 2023, due to concerns about weak deliveries, competition in China, and the company’s ongoing price cuts. Earlier this month, Tesla reported an 8.5% year-over-year decline in vehicle deliveries for the first quarter.
The company stated in the deck that it is expediting the launch of “new vehicles, including more affordable models,” that will “be able to be produced on the same manufacturing lines” as Tesla’s current lineup. Before investing in new manufacturing lines, Tesla is aiming to “fully utilize” its current production capacity and achieve “more than 50% growth over 2023 production.” Also in the deck, Tesla showcased screens of a robotaxi-based ride-hailing service. The company has been promising a self-driving vehicle for years without delivering on Musk’s promise.
