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 start production in the second half of 2025.
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.”
Tesla shares have plummeted more than 40% this year 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 stock, trading near its lowest since early 2023, rose about 8% in extended trading after the report.
The company said in the deck that it is 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.
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.
Sales growth across EVs is slowing, and Tesla and key rivals have been slashing EV prices, on and off for months, to try to spur demand. Tesla’s gross profits plummeted 18% in the first quarter, partly owing to price cuts throughout the start of the year.
Tesla said total sales included revenue from earlier sales of its premium driver assistance system, marketed as the Full Self Driving, or 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 is 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.”
A livestream of the earnings call is scheduled for 5:30 p.m. ET.
Correction: A prior version of this story had an incorrect figure for automotive sales.
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