Tesla reported a 9% fall in revenues last quarter, with first-quarter revenue declining to $21.3 billion, falling short of investors' expectations of $22.3 billion. The company also experienced a significant drop in sales, alongside hits to production and delivery (refer to Edition 10).
During the Tesla quarterly webcast, Elon Musk highlighted that the global EV adoption rate is under pressure. He stated that the automobile industry is shifting toward plug-in hybrids, a trend he opposes. In response to these challenges, Tesla announced plans to release a new line of products, including a lower-cost model. Musk unveiled the "Model 2" in January, priced at $25,000, and confirmed in the April webcast that these cars would be produced in the same factories.
This shift comes as Tesla faces increased competition, particularly from Chinese automaker BYD, which announced plans to enter UK and European markets next year. BYD's "Seagull" is priced under $10,000, a stark contrast to Tesla's cheapest "Model 3," which costs over $40,000.
Cost-Cutting Measures
To address falling demand and heightened competition, Tesla has had to cut costs and sacrifice profits. The company reduced its headcount by 10%, amounting to approximately 14,000 jobs. Vehicle prices have also dropped, with the Model Y, X, and S seeing reductions of $2,000 last week. Notably, the Model Y price has dropped from $63,000 in January last year to under $50,000 this month.
Safety Concerns
Tesla's autopilot system has faced scrutiny, with US auto safety regulators reporting its involvement in at least 13 fatal crashes. However, Musk defended the system, claiming it is twice as safe as human driving, stating, "stopping autonomy means killing people."
Despite this, safety issues persist. In December, Tesla had to recall over 2 million vehicles in the US, including thousands of its new "Cybertruck," due to an accelerator crash risk.
Stock Performance
The day before the earnings report, Tesla stock dropped by 3.4%. However, following the announcement, the stock surged by 17%. Despite this recovery, Tesla stock has fallen by 40% since the start of the year.
Musk recently traveled to Beijing to meet Premier Li Qiang to deepen cooperation with China and discuss Tesla's "RoboTaxi" service, a self-driving taxi initiative. Musk emphasized the future importance of autonomous vehicles, likening the absence of their use to relying on a flip phone or horse-driven carriage in the modern era.