Tesla had poor results in the first quarter of this year, according to the figures it reported this Tuesday. Total revenues fell 9% year-on-year in the first quarter, to $21,301 million, both due to the reduction in the average vehicle sales price and the decrease in units sold. Profit sank 55%, to 1,129 million, and cash generation was decimated, going from 2,513 in the first quarter of 2023 to 242 million at the start of this year. To try to resume growth, the company has announced that it will accelerate the launch of more affordable models.
Elon Musk has called analysts and investors for later. When the accounts are not going well, he usually counterattacks with the product and that is what he has done in this presentation of results, in which the numbers have fallen below market forecasts. “We have updated our future vehicle range to accelerate the launch of new models ahead of our previously announced start of production in the second half of 2025,” the company has indicated. “These new vehicles, including more affordable models, will use aspects of the next generation platform, as well as aspects of our current platforms, and can be produced on the same manufacturing lines as our current range of vehicles,” he added.
“This upgrade may result in less cost reduction than anticipated, but allows us to prudently increase our vehicle volumes in a more investment-efficient manner in uncertain times. “This would help us fully utilize our current planned maximum capacity of around three million vehicles, allowing for more than 50% growth over 2023 production before investing in new manufacturing lines,” he indicated.
Although the company usually systematically fails to meet the schedules it promises, Tesla shares have reacted upward, with increases of more than 6% outside the usual session hours. They have accumulated a drop of more than 40% so far this year. The price has recently reached its lowest level in the last 12 months. Even so, the company is worth more than 450,000 million euros on the stock market, compared to the little more than 50,000 million that both General Motors and Ford are worth. The difference with the Japanese Toyota, which was almost a trillion dollars, has been reduced to just 80,000 million dollars.
Questions about Tesla's strategy have exacerbated investor jitters at a time when the company is already facing slowing growth and declining margins and sales. As the company announced at the beginning of the month, vehicle deliveries, a figure used to measure the evolution of sales, fell in the first quarter to 386,810 units, 8.5% less than in the same period of the previous year. Not even price reductions have been able to boost demand in the face of growing Chinese competition.
The decline was the first year-on-year decline that the company has suffered, with the exception of those due to the pandemic. Tesla blames a combination of factors: “The decline in volumes was due in part to the initial phase of the updated Model 3 production ramp at our Fremont factory and factory shutdowns resulting from shipping diversions caused by the Red Sea conflict and an arson attack at the Berlin Gigafactory,” the company said in a statement.
Tesla continues to manufacture more vehicles than it is able to sell. In the first quarter, production was 433,371 vehicles, compared to 440,808 in the first quarter of 2023. The vast majority (412,376) were from their 3/Y models. That means he manufactured about 46,500 more vehicles than he delivered.
The company has continued to justify its slowdown this Tuesday: “Our company is currently between two great waves of growth: the first began with the global expansion of the Model 3/Y platform and we believe that the next will begin with advances in autonomy and the introduction of new products, including those built on our next-generation vehicle platform,” he said. “In 2024, our vehicle volume growth rate may be significantly lower than the growth rate achieved in 2023, as our teams work on the launch of the next generation of vehicles and other products,” he admitted.
Since purchasing Twitter, Musk has also become a very divisive figure, by embracing conspiracy theories and radical speeches and give free rein to misinformation and hate speech on the social network. With his harmony with figures from the extreme right, he is causing rejection by part of his market. In the United States, most Republicans, led by Donald Trump, despise the electric car and mock it. It is the progressives and liberals who defend (and buy) it. But Musk has positioned himself on the side of the republicans and beyond, angering many of their real and potential clients.
Mass layoffs
Given the poor performance of the company and the drop in sales, Elon Musk has begun to fire company employees, while asking shareholders to once again approve a remuneration of more than 40,000 million dollars for him. It was annulled by a judge. That compensation was once valued at more than $55 billion when shares were trading higher.
The company has undertaken a cost-cutting exercise to increase operational efficiency that includes mass redundancies. Tesla had more than 140,000 employees worldwide before beginning the largest workforce cut in its history. On April 15, it said it was reducing its staff by more than 10%. The actual number of people laid off could exceed 20,000, according to sources familiar with the company's planning cited by the Bloomberg agency. The group is preparing to cut 3,332 jobs in different locations in California, according to different notifications to the authorities made in said State. The record round of layoffs includes 2,688 workers in Austin, Texas, where the company's headquarters and one of its factories are located, according to a notice filed with the Texas Labor Commission.
Tesla has also slashed a newly formed marketing team, reversing course on a traditional advertising push that CEO Elon Musk green-lit less than a year ago. The entire U.S. “growth content” team, a group of about 40 employees overseen by top manager Alex Ingram, has been laid off in ongoing job cuts, according to people familiar with the matter. The company still has a small number of marketing staff in Europe, one person said.
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