Electric car maker Tesla reported a 55% drop in profits to $1.13 billion in the first quarter of 2024. The decline was attributed to the company’s price-cutting strategies and various challenges faced during the quarter. Revenue also decreased by 9% to $21.3 billion, while operating income fell by 54% compared to the same period last year.
Some of the challenges Tesla encountered during the quarter included the Red Sea conflict, an arson attack at Gigafactory Berlin, and the gradual ramp-up of the updated Model 3. Global electric vehicle sales continue to be under pressure as many carmakers prioritize hybrids over EVs.
Despite the profit decline, Tesla earned $442 million in zero emissions tax credits in the first quarter. Shares of the company rose 9% after CEO Elon Musk made forward-looking remarks about future products. Tesla plans to accelerate work on a new vehicle lineup with production expected to begin in early 2025.
Price cuts implemented by Tesla led to a temporary increase in sales, but ultimately impacted profits. The company delivered fewer vehicles in the first quarter of 2024 compared to previous quarters, and automotive gross margins decreased to 16.35%. On a positive note, energy storage revenues reached a record 4.1 GWh, and revenue from services, including the Supercharger network, totaled $2.28 billion.
The production of the Tesla Semi has been delayed, with the first vehicles now expected in late 2025 for internal use and in 2026 for external customers. Tesla is finalizing engineering for the Semi to allow for cost-effective high production and has already started construction of a Tesla Semi factory near the Gigafactory in Sparks, Nevada.
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