Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Tesla pledged to bring forward the launch of “more affordable” models of its electric vehicles, helping its stock recover some of its recent losses despite reporting a 9 per cent decline in first-quarter revenue amid a sharp fall in sales.
In a filing on Tuesday, the electric-car maker said it has “updated our future vehicle line-up to accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025”.
It added that these would include “more affordable” vehicles that could be produced on its existing manufacturing lines. The shares rose more than 9 per cent in after-hours trading.
Musk said in January that the company was preparing to start production of a new lower-cost car next year, priced at $25,000 and dubbed Model 2. The stock had fallen after a Reuters report earlier this month that the project had been shelved, which Musk denied. The company also reiterated its plan to unveil a self-driving “robotaxi” in August.
“We experienced numerous challenges, from the Red Sea conflict and the arson attack at Gigafactory Berlin, to the gradual ramp of the updated Model 3 in Fremont,” the company said of the start to the year. “Global EV sales continue to be under pressure as many carmakers prioritise hybrid over EVs. ”
Absent the news of a new vehicle line-up, the underlying financial performance remained disappointing. First-quarter revenue fell to $21.3bn from $23.3bn in the same period last year, missing analysts’ expectations for $22.3bn. That marks Tesla’s first year-on-year quarterly drop since the start of 2020.
Adjusted earnings per share almost halved from a year ago to 45 cents, versus estimates for 52 cents, and the carmaker reported a sixth consecutive quarter of declining gross margins. The closely watched financial metric fell to 17.4 per cent, down from a peak of 29.1 per cent in the first quarter of 2022.
The results come at turbulent time for chief executive Elon Musk. Tesla stock had plunged more than 40 per cent since the start of the year after warning of slowing vehicle deliveries, a potential move of its incorporation to Texas from Delaware and revealing plans to cut more than 10 per cent of its workforce — at least 14,000 jobs.
Earlier this month, Tesla said it had delivered 386,810 electric cars between January and March, a fifth lower than the previous quarter, and 8 per cent below the same period in 2023. It has continued to cut prices for its most popular models as excess inventory piles up.
Excluding the effects of regulatory credits, the gross margin from Tesla’s automotive unit — a closely watched measure of its core operations — fell to 16.4 per cent for the quarter, down from 19 per cent a year ago.
The company also reported free cash flow of negative $2.5bn in the period, largely due to a big jump in “AI infrastructure capex” to $1bn.
“While many are pulling back on their investments, we are investing in future growth — including our AI infrastructure, production capacity, our Supercharger and service networks and new products infrastructure,” the company said.
Additional reporting by Richard Waters