May 23, 2024

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Tesla profits halved as demand falls

Tesla profits halved as demand falls

Tesla announced that its profits fell sharply in the first three months of the year to $1.13 billion (£910 million), compared to $2.51 billion in 2023.

It caps a difficult period for the electric vehicle (EV) maker, which – facing falling sales – announced thousands of job cuts.

President Elon Musk remains optimistic about its prospects, telling investors that new models will be introduced.

Its share price has risen but analysts say it still faces significant challenges, including from lower-cost competitors.

The company has suffered from falling demand and competition from cheap Chinese imports, causing its stock price to collapse by 43% through 2024.

Q1 2024 numbers revealed revenue of $21.3 billion, down from analysts' expectations of just over $22 billion.

But Tesla's decision to postpone the launch of new models from the second half of 2025 boosted its shares by about 12.5% ​​in after-hours trading.

Details of the prices of the new vehicles were not revealed.

However, Musk made it clear that he also had bigger ambitions, touting Tesla's AI credentials and its plans for self-driving vehicles, even going so far as to say that viewing it as just a car company was “the wrong frame of mind.”

“If someone doesn't think Tesla is going to solve the autonomy problem, then I think they shouldn't be an investor,” he said.

But analysts cast doubt on these sentiments, with Deutsche Bank saying self-driving cars face “technological, regulatory and operational challenges”.

However, Tesla has already been on a charm offensive, trying to win new customers by lowering its prices in a series of markets in the face of declining sales.

She also said her situation was not unique.

“Global electric vehicle sales remain under pressure as many automakers prioritize hybrid vehicles over electric vehicles,” she said.

Despite its plans to introduce new models that were scheduled to be launched next year, the company is reducing its workforce.

Tesla said it will lose 3,332 jobs in California and 2,688 jobs in Texas, starting in mid-June.

The cuts in Texas represent 12% of Tesla's total workforce of about 23,000 people in the region where its factory and headquarters are located.

However, Musk sought to downplay the significance of the move.

“Tesla has now created over 30,000 manufacturing jobs in California!” He said in a post on his social media platform X, formerly Twitter, on Tuesday.

Another 285 jobs will be lost in New York.

Tesla's total workforce was more than 140,000 late last year, up from about 100,000 at the end of 2021, according to the company's filings with US regulators.

Musk's salary

The car company is also facing other problems, as the fight over Musk's compensation is still ongoing.

The judge found that Tesla's directors had breached their fiduciary duty to the company by giving Mr Musk the refund.