Yahoo Finance Tesla Says It’s Working on New EVs After a Huge Drop in Profits
The hits keep coming for Tesla.
Weeks after announcing its first sales dip in years, along with its intention to lay off 10 percent of its workforce, the company has revealed that its profit and revenue fell last quarter, according to The New York Times. As a result, the company is accelerating plans to develop new and more affordable EVs.
More from Robb Report
Before its earnings call on Tuesday evening, Tesla reported that its first-quarter profit fell by 55 percent, to $1.1 billion, and revenue by 9 percent, to $21.3 billion, compared to the same period last year. Additionally, Tesla’s operating profit for last quarter was 5.5 percent, half of what it was last year at the same time, and more in line with that of traditional automakers
The disappointing numbers were to be expected. Tesla announced at the beginning of the month that it delivered just 383,000 vehicles globally in the first quarter. That number represented an 8.5 percent decrease year-over-year and, even worse, was more than 16 percent shy of what Wall Street analysts were expecting. Tesla has also repeatedly and aggressively cut prices of its EVs over the last year, reducing the amount of money it makes from each sale.
Tesla CEO Elon Musk attempted to allay concerns about the direction of his company later that evening. In the earnings call, he revealed that the company plans to begin production of new models, including some he said would be more affordable, by the beginning of next year, according to Reuters. The announcement came just over two weeks after the same newswire reported that Tesla was scrapping plans for a budget-friendly EV widely referred to as the Model 2.
The earnings call seems to have soothed Wall Street, at least temporarily. In the wake of Musk’s performance—which Bloomberg called a “master class”—shares in the company rose more than 10 percent on Wednesday, according to CNBC. That will be welcome news for Tesla, which has had a year to forget on the stock market. Even after this latest bump, the company’s share price is down 35 percent since the start of the year, and it has been one of the worst-performing stocks in both the Nasdaq 100 and S&P 500 indexes.
Best of Robb Report
Sign up for Robb Report's Newsletter. For the latest news, follow us on Facebook, Twitter, and Instagram.
