The first quarter of 2024 saw Tesla post a 9% fall in sales, the company’s largest year-over-year decline since 2012. In Q124, its sales was $21.30 billion, down from $23.33 billion during the same period the previous year.
Due to many price cuts starting at the beginning of the year, Tesla’s gross profit decreased by 18% in the first quarter to $3.6 billion from $4.5 billion in Q1 2023. This occurs at a time when the global EV market is experiencing challenges, with Tesla leading the way due to poor deliveries, competition from Chinese competitors, and price reductions that recently compelled the business to lay off 10% of its worldwide staff.
“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.
While many people are cutting back on their investments, Tesla claims that with $2.8 billion in capital expenditures in Q1, the firm is investing in future development, including its AI infrastructure, manufacturing capacity, our Supercharger and service networks, and new product infrastructure.
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.
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