Tesla’s stock soared by over 13 per cent in after-hours trading, marking a significant rebound from its lowest point in 15 months.
This surge came shortly after the electric car manufacturer announced plans to expedite the release of more affordable vehicle models.
Despite the positive market response, Tesla reported a notable 9 per cent year-on-year decline in revenue for the March quarter. This decline represents the company’s first revenue drop since the COVID-19 quarter in 2020 and its most substantial decrease since 2012.
“1Q had something for everyone. Results were not as bad as many feared, but questions remain regarding near-term growth/profitability. FCF weaker than feared (inventory, AI capex). Accelerated new product launches (on existing lines) and details on the ride-hailing app were unexpected features,” said Adam Jonas, Equity Analyst at Morgan Stanley.
In a filing made on Tuesday, Tesla unveiled its strategy to revise its future vehicle lineup, aiming to accelerate the introduction of new models ahead of the previously scheduled production start in the latter half of 2025.
Originally estimated to cost $25,000, these more affordable vehicles will be integrated into Tesla’s existing production lines. The company’s overarching goal is to increase production by 50 per cent compared to 2023 levels before investing in new production lines.
For the quarter ending in March, Tesla reported revenue of $21.3 billion, down from $23.33 billion a year earlier. This figure fell short of analysts’ average revenue estimate of $22.15 billion, Reuters reported.
Moreover, the average revenue per vehicle delivered in the quarter experienced a nearly 5 per cent decrease from the previous year, amounting to $44,926 per vehicle. This decline reflects the impact of ongoing price adjustments implemented by Tesla.
Production volumes also experienced a sequential decline, attributed to the early phase of the Model 3 ramp-up at the Fremont factory, factory closures in Berlin, and planned shutdowns in China.
Elon Musk, CEO of Tesla, addressed the recent workforce reductions at the company, describing them as necessary for restructuring purposes in preparation for the next phase of growth. It’s anticipated that these layoffs will result in annual savings of $1 billion for Tesla.
“First impression for us is CEO Musk appeasing the market by accelerating new product launches to H2 2025, thus leveraging existing capacity (3munits), although wording from the outlook raises the risk of compromises on product to accelerate launches,” said Philippe Houchois, Equity Analyst at Jefferies.
“At the same time, commitment to robotaxi is unwavering, still without providing clarity on a timeframe and business model. Meanwhile, comments during the call on +ve revenue growth and reducing inventories in Q2 look somewhat optimistic.”