Tesla’s stock saw a significant boost in post-market trading following the announcement that the company would be expediting the launch of more affordable vehicles. In its first quarter shareholder release, Tesla stated that it had updated its future vehicle line-up to accelerate the launch of new models ahead of schedule. These new models, including more affordable options, will incorporate aspects of both the next generation platform and the current platforms, allowing them to be produced on the same manufacturing lines as the current vehicle line-up.
This announcement from Tesla comes at a crucial time, as investor sentiment towards the company has been declining throughout 2024. Despite reporting a revenue and earnings miss for the quarter, Tesla’s shares surged over 6% in after-hours trade. This indicates that investors are optimistic about the company’s current and future prospects.
In terms of financials, Tesla reported adjusted earnings per share of $0.45, falling short of the $0.52 forecasted by analysts. The company’s top-line revenue also experienced a drop, with $21.30 billion reported compared to the estimated $22.31 billion. These figures mark Tesla’s first decline in revenue in four years. However, on the profitability front, Tesla reported $1.2 billion in operating profit and $1.5 billion in adjusted net income, surpassing estimates.
Tesla’s Q1 delivery guidance remains unchanged, with the company still expecting “notably lower volume.” This aligns with what Tesla had previously stated in its Q4 earnings report. The company has faced challenges this year, including disappointing Q4 results, weak 2024 delivery guidance, missed Q1 deliveries, and rumors surrounding the discontinuation of a sub-$30,000 volume EV.
The decline in revenue and profitability can be attributed to a weaker-than-expected quarter of sales for Tesla. In Q1, the company reported 386,810 global deliveries, falling short of the estimated 449,080. Tesla also produced 433,371 vehicles, which was below the estimated 452,976. These figures have raised concerns about global demand for Tesla vehicles, leading to multiple rounds of price cuts. Recently, Tesla reduced prices for vehicles in the U.S. and China, which negatively impacted the stock during the day.
Despite these challenges, Tesla’s confirmation that the long-awaited next-generation platform will support a sub-$30,000 mainstream EV (known as the Model 2) is significant for investors. Many investors had been anticipating a low-cost EV from Tesla, considering it a volume play for the company. It was believed that Tesla would utilize a revolutionary “unboxed” production line to manufacture these affordable vehicles. After Reuters reported that Tesla was canceling the cheaper EV, Elon Musk took to X (formerly Twitter) to deny the claims and later announced the unveiling of the robotaxi, which is expected to be a self-driving vehicle without a steering wheel or pedals.
The fact that both a robotaxi and a cheaper EV are still in Tesla’s plans is reassuring for investors. In its earnings release, Tesla emphasized its commitment to a revolutionary “unboxed” manufacturing strategy for its purpose-built robotaxi product. This indicates that Tesla is actively pursuing innovative approaches to production and delivery.
In conclusion, while Tesla faced challenges in terms of revenue and profitability in Q1, investors responded positively to the company’s announcement of accelerating the launch of more affordable vehicles. The confirmation of a sub-$30,000 mainstream EV and the continued pursuit of a robotaxi demonstrate Tesla’s commitment to innovation and meeting market demands. As the story continues to develop, it will be interesting to see how these new models and features impact Tesla’s future trajectory.