Tesla reported on Tuesday that it made significantly less money in the first three months of the year because of its tepid car sales, reinforcing concern among investors that the company led by Elon Musk is losing ground in the market for electric vehicles.
Profit fell 55 percent, to $1.1 billion, from the first quarter of 2023, the company said. And revenue fell 9 percent, to $21.3 billion.
A slump in earnings was seen as inevitable after Tesla said this month that sales in the first quarter fell 8.5 percent from a year earlier, and after the company announced plans to lay off more than 10 percent of its employees worldwide, or about 14,000 people. The job cuts, including more than 2,000 workers at the company’s factory in Fremont, Calif., were interpreted as a sign that Tesla was struggling to bring costs in line with sinking revenue.
A year ago, in the first quarter of 2023, Tesla said it made $2.5 billion and had one of the best profit margins in the industry. But the company has been forced to cut prices, including in a new round last week, lowering the amount it makes on each car it sells. For a while, that strategy seemed to help bolster the company’s sales but Tesla now appears to be struggling to attract buyers even with lower prices.
Tesla’s operating profit margin in the quarter was 5.5 percent, half as much as a year earlier and in line with how much other automakers tended to earn.
Tesla investors are increasingly worried that its falling sales and profit are a symptom of larger problems, possibly pointing to the company’s inability to effectively respond to increased competition from established automakers and new carmakers from China.