Tesla has always been a company that has defied the odds. It might have done so again; the company’s shares soared by 16%, whereas the company reported a 9% year-over-year revenue decline — its most significant drop since 2012. Tesla came up with a bunch of reasons as to why the company’s annual revenue shrank. These included conflict in the Red Sea, an arson attack at its Gigafactory in Berlin, production costs, and waning consumer demand for EVs.
This has not been all, the car maker also reported revenue of $21.3 billion for the first quarter, or about 45 cents per share. Analysts had forecast that it would report $22.15 billion in revenue, about 51 cents per share. Despite experiencing a nearly 42% decline this year and ranking as one of the poorest performers in the S&P 500 at the beginning of 2024, Tesla’s stock saw a surge after Musk pledged that the company would commence production of a more affordable electric vehicle by early next year. Subsequently, the stock rose by over 11% during after-hours trading in the evening.
“We have updated our future vehicle line-up to accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025,” Tesla said. Musk laid out a more ambitious timetable during an earnings call, telling investors that Tesla “expects it to be more like early 2025 if not late this year.”
Tesla plans to make the new vehicles more affordable, Musk said, noting that production is “not contingent on any factory or massive production line.”
“It’ll be made on our current production lines much more efficiently,” Musk said.
Producing cheaper Teslas may favour the company, but that is not considered a long-term favour. “This update may result in less cost reduction than previously expected but enables us to prudently grow our vehicle volumes in a more capex-efficient manner during uncertain times,” Tesla said.
As experts say, Tesla has been forced into this decision as a slowdown in global demand for electric cars has been observed. Consumers are opting for hybrids and less expensive EVs.
“Global EV sales continue to be under pressure as many carmakers prioritize hybrids over EVs,” Tesla said.
Musk has looked to reset the narrative, boasting on X earlier Tuesday that Tesla’s Model 3 is “quicker than Porsche 911.”
Vaibhav Taneja, Tesla’s chief financial officer, told investors during the earnings call that cutting its workforce by more than 10% is expected to generate savings of more than $1 billion annually. Taneja compared the layoffs to pruning a tree.
Tesla’s chief financial officer, Vaibhav Taneja, said during the earnings call that laying off another 10% of the workforce will save the company 1 billion USD annually. He compared the layoffs to pruning a tree.
“Any tree that grows needs pruning,” Taneja said. “This is the pruning exercise, and at the end, [Tesla] will be much stronger and much more resilient to deal with the future.”