American clean energy automotive firm Tesla reported a 9% drop in revenue in the first quarter of 2024, the steepest year-over-year decline for the company since 2012. Its revenue dropped to $21.30 billion in Q124 as compared to $23.33 billion in the same period last year.
Tesla’s gross profit fell 18% in the first quarter to $3.6 billion from $4.5 billion in Q1 2023 owing to multiple price cuts right from the beginning of the year. This comes at a time when the EV industry is facing headwinds globally with Tesla particularly seeing weak deliveries, competition from Chinese incumbents, price cuts, which forced the company to recently slash 10% of its global workforce.
“Our global EV sales continue to be under pressure as many carmakers prioritize 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,” Elon Musk, CEO, Tesla said in the investor call.
Talking about Tesla’s upcoming vehicle line, Musk hinted at producing more mass-market models that will “be able to be produced on the same manufacturing lines” as Tesla’s current lineup. “We’re expecting to make more affordable models which will have aspects of our next-generation models and our current models. These will be produced in our current production lines. Tesla is aiming to fully utilize its current production capacity and to achieve more than 50% growth over 2023 production before investing in new manufacturing lines,” Musk adds.
Tesla said that while many are pulling back on their investments, the company is investing in future growth – including its AI infrastructure, production capacity, our Supercharger and service networks and new products infrastructure – with $2.8 billion of capital expenditures in Q1.
The company added that the decline in vehicle deliveries, was partially due to the Model 3 update in the Fremont factory and Giga Berlin production disruptions. “Our operating income decreased YoY to $1.2 billion in Q1, resulting in a 5.5% operating margin. It was primarily impacted by reduced vehicle ASP due to pricing and mix, increase in operating expenses partly driven by AI, cell advancements and other R&D projects,” Tesla said.