Tesla shares jump 13% after Musk says company aims to start production of affordable new EV by early 2025

Tesla
reported
a
9%
drop
in
first-quarter
revenue
on
Tuesday,
the
biggest
decline
since
2012,
and
missed
analysts’
estimates,
as
the
electric
vehicle
company
weathers
the
effect
of
ongoing
price
cuts.

The
stock
jumped
in
extended
trading
after
CEO

Elon
Musk
told
investors
that
production
of
new
affordable
EV
models
could
begin
sooner
than
expected.

Here’s
what
the
company
reported
compared
with
what
Wall
Street
was
expecting,
based
on
a
survey
of
analysts
by
LSEG:

• 
  Earnings
  per
  share: 45
  cents
  adjusted
  vs.
  51
  cents
  expected
• 
  Revenue: $21.30
  billion
  vs.
  $22.15
  billion
  expected

Revenue
declined
from
$23.33
billion
a
year
earlier
and
from
$25.17
billion
in
the
fourth
quarter.
Net
income
dropped
55%
to
$1.13
billion,
or
34
cents
a
share,
from
$2.51
billion,
or
73
cents
a
share,
a
year
ago.

The
drop
in
sales
was
even
steeper
than
the
company’s
last
decline
in
2020,
which
was
due
to
disrupted
production
during
the
Covid-19
pandemic.
Tesla’s
automotive
revenue
declined
13%
year
over
year
to
$17.38
billion
in
the
first
three
months
of
2024.

Musk
said
on
the
call
that
the
company
plans
to
start
production
of
new
models
in “early
2025,
if
not
late
this
year,”
after
previously
expecting
to
begin
in
the
second
half
of
2025.
Musk
also
touted
Tesla’s
investments
in
artificial
intelligence
infrastructure,
and
said
the
company
is
in
talks
with “one
major
automaker”
to
license
its
driver
assistance
system,
which
is
marketed
in
the
U.S.
as
the
Full
Self-Driving,
or
FSD,
option.

In
its

shareholder
deck,
Tesla
reiterated
a
pessimistic
outlook
for
2024,
telling
investors
that “volume
growth
rate
may
be
notably
lower
than
the
growth
rate
achieved
in
2023.”

Prior
to
the
13%
jump
after
hours,
Tesla
shares
were
down
more
than
40%
this
year,
reaching
their
lowest
since
January
2023,
on
concerns
about
weak
deliveries,
competition
in
China
and
the
company’s
ongoing
price
cuts.
Earlier
this
month,
Tesla
reported
an
8.5%
year-over-year
decline
in
vehicle
deliveries
for
the
first
quarter.

The
company
said
in
the
deck
that
it’s
accelerating
the
launch
of “new
vehicles,
including
more
affordable
models,”
that
will “be
able
to
be
produced
on
the
same
manufacturing
lines”
as
Tesla’s
current
lineup.
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.

Also
in
the
deck,
Tesla
showed
off
screens
of
a
robotaxi-based
ride-hailing
service.
The
company
has
been
promising
a
self-driving
vehicle
for
years
without
delivering
on
Musk’s
promise.

Sales
growth
across
EVs
is
slowing,
and
Tesla
and
key
rivals
have
been
slashing
EV
prices
to
try
to
spur
demand.
Tesla’s
gross
profits
plummeted
18%
in
the
first
quarter,
partly
due
to
price
cuts
this
year.

After
discussing
operational
challenges
in
the
first
quarter,
including
Red
Sea
supply
chain
disruptions,
Musk
said
on
the
call
that, “We
think
Q2
will
be
a
lot
better.”

Tesla
said
total
sales
included
revenue
from
earlier
sales
of
its
FSD
option.
The
release
of
a
feature
called
Autopark
in
North
America
allowed
the
company
to
recognize
the
deferred
revenue.

Chris
Redl,
autos
analyst
at
Siena
Capital,
estimates
that
Tesla
recognized
as
much
as
$700
million
in
deferred
revenue
in
the
quarter
from
FSD.
That’s
roughly
4.3%
of
Tesla’s
automotive
revenue
after
stripping
out
regulatory
credits.

Tesla
embarked
on
a
massive
restructuring
this
month,
with
two
executives,
Drew
Baglino
and
Rohan
Patel,
resigning.
Musk
said
last
week
in
a
companywide
memo
that
the
automaker
was
cutting
more
than
10%
of
its
global
workforce.

Capital
expenditures
rose
to
$2.77
billion,
up
34%
from
a
year
earlier.

Free
cash
flow
turned
negative
in
the
quarter,
with
the
company
reporting
a
deficit
of
$2.53
billion.
A
year
ago,
Tesla
reported
free
cash
flow
of
$441
million,
a
number
that
reached
$2.06
billion
in
the
fourth
quarter.
Tesla
attributed
the
negative
figure
to
a
$2.7
billion
buildup
in
inventory
and
$1
billion
in
capital
expenditures
on “AI
infrastructure.”

Revenue
in
Tesla’s
energy
division
increased
7%
to
$1.64
billion,
while
services
and
other
revenue
rose
25%
to
$2.29
billion
compared
to
the
same
period
last
year.

Musk
was
asked
on
the
earnings
call
if
he
has
any
intention
to
leave
Tesla
given
his
many
jobs,
including
leading
SpaceX,
controlling
X
(formerly
Twitter)
and
running
other
businesses.

Musk
didn’t
provide
an
answer,
but
said
he
spends
the
majority
of
his
time
at
work,
rarely
even
takes
off
a
Sunday
afternoon
and
will
work
to
make
sure
Tesla
is “very
prosperous.”

At
the
conclusion
of
the
call,
Tesla’s
Martin
Viecha,
vice
president
of
investor
relations,
said
that
he’s

leaving
the
company
in
a
couple
months
after
seven
years.
Musk
thanked
him.

Correction:
A
prior
version
of
this
story
had
an
incorrect
figure
for
automotive
sales.

WATCH:

The
fact
that
Musk
was
right
about
EVs
doesn’t
mean
he’s
going
to
be
right
now