Tesla Reports Lower-Than-Expected Profit and Sales in Q1 2024 Financial Results

Tesla Inc. reported unsatisfactory financial results for the first quarter of 2024, with both profit and sales falling short of Wall Street expectations. The electric vehicle maker's adjusted earnings per share came in at $0.45, missing consensus estimates by 5 cents, while revenue of $21.301 billion reflected a 9.5% year-over-year contraction. "We faced several challenges in the first quarter, including the Red Sea conflict, an arson attack at Gigafactory Berlin, and the gradual ramp of the updated Model 3 in Fremont," Tesla stated in its earnings report.

The company's GAAP net income plummeted 55% compared to the same period a year ago, reaching $1.13 billion. Tesla attributed the decline to reduced average vehicle selling prices and an adverse effect of supply mix. Total vehicle production was down 2%, and deliveries took a 9% hit, with the company delivering 386,810 cars in Q1 2024.

Tesla's gross profit margin also fell to 17.4%, down from 19.3% a year ago, below the management's target of 20%. The company generated just $242 million in operating cash flow for the quarter, a significant drop from $2.513 billion a year ago, and its unencumbered cash flow declined to $2.531 billion from $441 million.

Why this matters: Tesla's weaker-than-expected financial performance raises concerns about the company's ability to navigate increasing competition in the electric vehicle market and sustain its growth trajectory. As traditional automakers and Chinese EV makers ramp up their offerings, Tesla faces pressure to innovate and expand its product lineup while managing costs and supply chain challenges.

Despite the challenges, Tesla remains optimistic about its future prospects. The company announced plans to accelerate the launch of new, more affordable vehicle models, including a $25,000 Model 2 small car, with production expected to begin in the second half of 2024 or potentially even late this year. Tesla also emphasized its focus on advancements in autonomy and the introduction of novel products built on a next-generation vehicle platform.

Tesla CEO Elon Musk expressed confidence in the company's ability to solve autonomous driving technology, which he sees as a key growth catalyst. "We remain focused on profitable growth, including by leveraging existing factories and production lines to introduce new and more affordable products," Tesla stated, highlighting its continued investments in AI infrastructure, production capacity, Supercharger and service networks, and upcoming products.

Key Takeaways

• Tesla reported weaker-than-expected Q1 2024 financial results, with profit and sales missing estimates.
• Tesla's GAAP net income plummeted 55% due to reduced vehicle prices and supply chain issues.
• Tesla's gross profit margin fell below the company's target, and its cash flow declined significantly.
• Tesla's weaker performance raises concerns about its ability to navigate competition and sustain growth.
• Tesla plans to accelerate new, more affordable models, including a $25,000 Model 2, and focus on autonomy.