Tesla profits plummet in Q1, company accelerates new product development

Tesla reported steep declines in first-quarter revenue and profit but rallied shareholders over promises of new products.

The electric vehicle manufacturer reported revenue of $21.3 billion, down 9% from the first quarter of 2023. The decline reflects an 8.5% year-over-year drop in sales for the period during which the company delivered 386,810 units. Both deliveries and revenue were lower than analysts had expected after Tesla’s strong growth in the months leading up to 2024.

While its revenue slid moderately, the brand’s earnings deteriorated far more rapidly. Its net income plummeted 55% over the quarter, hitting $1.13 billion by the end of March.

Compounding the impact of slower sales, the company has implemented aggressive price cuts since early 2023 in an effort to spur demand. The extraordinary rate at which the brand’s prices have fallen can be easily seen in the used EV market. According to CarGurus data, the average price of a preowned Tesla has dropped 32.8% year-over-year to $32,286 as of mid-April.

While growth in the EV market has slowed down in recent months, much of that decline can be attributed to Tesla. “Tesla’s numbers seem to drag down the entire EV sector because they have such a large market share, but many brands are showing incredible year-over-year growth,” said Liz Najman, Director of Market Insights at Recurrent. Najman also noted that registrations for Ford, Hyundai, Kia, BMW, and Rivian EVs have accelerated ahead of last year’s rates, suggesting that the cooldown in demand may be unique to Tesla rather than an industry-wide issue.

However, despite the company’s financials and dissipating demand raising several red flags, Tesla shares still rose 13% on the news that development of the so-called “affordable” EV was being accelerated. During the brand’s earnings call with investors, CEO Elon Musk said new products, including the cheaper model, would be coming in “early 2025, if not late this year.” Previously, the automaker had not expected to expand its lineup until late 2025. 

The confirmation that Tesla is still working on an affordable option also arrives after Reuters reported that the project had been scrapped in favor of making a robotaxi, which is now scheduled to arrive later this year. Musk denied the report in a post on his social media platform X.