In a surprising turn of events, Tesla has reported its first quarterly revenue decline in almost four years. The electric vehicle pioneer announced that revenues fell by nine percent year-over-year to $21.3 billion, down from analysts’ average expectations of $22.15 billion. This marks a significant shift for a company known for its rapid growth and market disruption. Earnings per share also fell short of market predictions, with net quarterly profit plunging by 55 percent to $1.13 billion.
The decline in business performance became apparent after Tesla failed to meet delivery expectations in the first quarter, shipping about 387,000 vehicles—8.5 percent less than the same period last year and a 20 percent drop from the last quarter of 2023. Contributing to this shortfall was a temporary halt in production at Tesla’s Grünheide plant near Berlin, caused by an attack on its power supply.
Looking ahead, Tesla has not issued a specific forecast for vehicle deliveries this year but expects a noticeable slowdown in growth pace compared to 2023. Despite this, CEO Elon Musk expressed optimism during a conference call with analysts, anticipating a sales increase. Following these discussions, Tesla’s stock saw a temporary increase of more than seven percent in after-hours trading.
A significant factor in the stock’s rise was Musk’s announcement that Tesla plans to introduce new models into production before the second half of 2025, including more affordable vehicles. This news comes amidst media skepticism about Tesla’s commitment to a long-promised cheaper model. Musk recently hinted at the debut of a robotaxi on August 8, but did not mention the budget model for human drivers.
The importance of an affordable Tesla electric vehicle cannot be overstated. “Without a new vehicle, Tesla might face more headwinds for growth as competition from China and other OEMs emerges,” noted Emmanuel Rosner, an analyst at Deutsche Bank. Mario Herger, a futurist, emphasized the necessity of a budget model for Tesla to meet its ambitious annual production and sales target of 15 to 20 million vehicles, particularly to compete on price with Chinese firms.
Investors and analysts have positively received news about the production of a new, affordable electric vehicle (EV). While Tesla is viewed not just as a car manufacturer but as a blend of software, AI, and robotics company, its valuation multiples remain extraordinarily high. However, it’s important to consider that Tesla continues to maintain robust margins compared to many other automakers. This is coupled with a revolutionary approach to vehicle production and software, especially in the realm of Artificial Intelligence.
It’s crucial for Elon Musk to quickly deliver results in AI and Full Self-Driving (FSD) capabilities. The stock has found strong support at $125.61. As Tesla navigates these challenges, the market watches closely, anticipating the company’s next moves in the evolving landscape of global automotive technology.
