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Tesla profits drop 55%, company says EV sales 'under pressure' from hybrids | TechCrunch

Tesla profits fell 55% to $1.13 billion in the first quarter from the same year-ago period as a protracted EV price-cutting strategy continued to cut into the automaker’s bottom line.

The results, posted after markets closed Tuesday, sent shares up 7% immediately following the release. Tesla reported revenue of $21.3 billion in the first quarter, an 9% drop from the first quarter of 2023.

Analysts polled by Yahoo Finance expected earnings of $0.51 per share on $22.15 billion in revenue.

The company said in its Q1 earnings report that it experienced “numerous challenges in the first quarter, including from the Red Sea conflict and the arson attack at Gigafactory Berlin, to the gradual ramp of the updated Model 3 at its factory in Fremont, California. Tesla also noted that global EV sales continue to be under pressure as many carmakers prioritize hybrids over EVs.

Tesla has seen EV sales grow over the past several years, topping out to a new record of 1.8 million vehicles in 2023. But the company’s profits have suffered thanks to repeated price cuts that started in late 2022.

While those price cuts did provide a temporary bump in sales, it hasn’t had a lasting effect. Tesla delivered 386,810 vehicles in the first quarter of 2024, down 20% from the 484,507 it delivered in the final quarter of 2023. This wasn’t just a quarter-over-quarter blip either; Tesla delivered 8.5% fewer cars than the first quarter of 2023.

Tesla warned in January that growth of its vehicle sales “may be notably lower” in 2024, noting at that time it was between “two major growth waves” and prepping for the launch of a new vehicle platform to build a smaller EV that costs around $25,000. The company has also been prepping a “robotaxi” built on the same platform. In the meantime, Tesla’s only new model is the expensive (and fussy) Cybertruck.

Tesla CEO Elon Musk said during the company’s earnings call in January the smaller and cheaper EV would go into production in late 2025 at the company’s factory in Texas and eventually expand to a yet-to-be-built factory in Mexico.

Three months later, Musk appears to have scrapped the company’s low-cost EV playbook. Musk paused those low-cost EV plans, opting instead to plow headlong into launching the robotaxi, which will be revealed in some capacity in August. Less than two weeks after announcing the robotaxi launch date, Musk oversaw a 10% reduction in headcount and a restructuring that puts autonomy in sharp focus.

Two high-profile executives — Drew Baglino, Tesla’s SVP of Powertrain and Energy, and Rohan Patel, VP of Public Policy and Business Development — also left the company.

This story is developing …

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Tesla blames sales drop on Houthi attacks and arson in Germany | TechCrunch

Tesla just turned in one of its more disappointing first quarters for deliveries in a while, and the company is putting some of the blame on an arson attack at its factory in Germany and shipping disruptions caused by Houthi attacks in the Red Sea.

Tesla said Tuesday that it delivered 386,810 vehicles in the first quarter of 2024, down 20% from the 484,507 it delivered in the final quarter of 2023. Crucially, Tesla shipped fewer cars than it did in the first quarter of 2023, meaning this was the first year-over-year drop in sales in three years.

Production was also down year-over-year, which Tesla attributed to switching to making the new Model 3, as well as the other disruptions. The arson attack shut down the Germany factory for nearly a week, and Tesla suspended production there for two weeks in January due to the problems in the Red Sea. The company’s stock fell more than 6% in early trading.

These drops come just two months after Tesla warned that sales growth could be “notably lower” in 2024 as it comes off a successful 2023 fueled by price cuts. The company claimed in January that it is “between two major growth waves” as it tries to ramp up production of the Cybertruck. It also has a lower-cost EV in the works, though plans for that have already shifted, and the company has said it is trying to create an all-new manufacturing process to get costs lower.

The company is facing increasing competition in China, too, where companies big and small are flooding the market with low-cost EVs. Bloomberg News reported last month that Tesla curtailed output at its Shanghai factory as a result of slower sales growth in the country.

Tesla tried to pull a few tricks at the end of the quarter to boost sales, as it usually does. The company promoted a one-month free trial of its advanced driver assistance software (which it calls Full Self-Driving, even though it does not make the cars autonomous). It also teased through much of March that it was hiking prices starting April 1.

This story has been updated to include more information about Tesla’s factory shutdowns. 

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