Tesla suffered a nine percent decline in sales in the first quarter of 2024, as CNBC reports. This is the steepest fall since 2012. Nevertheless, Tesla’s share price has made an enormous jump. The reason: Elon Musk hopes to start production of cheaper models earlier than originally expected. That would mean: Tesla is attacking the increasingly strong Chinese competition such as BYD sooner than hoped.
Sales of electric vehicles are currently falling worldwide. The Chinese competition has the upper hand with affordable models. Tesla responds by cutting prices to stimulate demand. But that puts pressure on profits.
Tesla shares rise in double digits after Musk’s announcement
The unexpectedly weak results did not depress Tesla’s share price on Tuesday evening. Elon Musk announced that the new affordable models could probably be produced sooner than initially thought. This caused stocks to skyrocket.
The Tesla share price jumped to as much as $163.70 in the USA. Before Elon Musk’s announcement it was at $142.02.
Musk: Cheap model launches “early 2025, if not at the end of this year”
However, Elon Musk expressed optimism and announced that production of new models could begin “in early 2025, if not the end of this year.”
Musk also discussed Tesla’s investments in artificial intelligence, reporting that the company is in negotiations with a “major automaker” to license its driver assistance system.
However, despite the hopeful outlook, Tesla made a pessimistic forecast for 2024. According to CNBC, the company informed investors that the year-on-year growth rate in 2024 could be significantly lower.
Price cuts weigh on Tesla’s profits
As CNBC further reports, Tesla achieved adjusted earnings per share of 45 cents in the first quarter of 2024. Experts had expected 51 cents, significantly more. Sales also fell compared to the expected $22.15 billion and amounted to $21.30 billion (just under 20 billion euros).
The company’s sales figures are also declining. Gross profits fell 18 percent in the first quarter, partly due to price cuts this year. Despite the challenges, Musk expressed confidence that the second quarter will be “much better.”
Tesla carried out a major restructuring this month, cutting more than 10 percent of its global workforce.
Gigafactory in Grünheide is cutting 400 jobs
Tesla has been operating its only European Gigafactory in Grünheide in Berlin-Brandenburg for around two years. Around 12,500 employees currently work there. Tesla wants to cut 400 jobs. This is how Elon Musk reacts to the slow sales.
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