Tesla brings forward new models as profits slump

BBC || Shining BD

Published: 4/24/2024 6:13:22 AM

Tesla has seen its profits more than halve this year, and says it will bring forward the launch of new models as it cuts thousands of jobs to try to reverse its fortunes.


The electric vehicle (EV) maker said on Tuesday it had made $1.13bn (£910m) over the first three months of the year, compared with $2.51bn a year earlier.

Tesla, owned and run by the billionaire Elon Musk, said it would also axe more than 6,000 jobs at its sites in Texas and California.

The company has suffered from falling demand and competition from cheaper Chinese imports which has led its stock price to collapse by 43% over 2024.

Earlier this month, it said it would shed 10% of its global workforce.

Figures for the first quarter of 2024 revealed revenues of $21.3bn, down on analysts' predictions of just over $22bn.

But the decision by Tesla to bring forward the launch of new models from the second half of 2025 boosted its shares by nearly 12.5% in after-hours trading.

The EV maker did not reveal details on pricing of the new vehicles.

Mr Musk will face investors in a conference call on details of the new models, possibly to include the Model 2 (a cheaper Tesla vehicle which Reuters reported had been shelved in April).

However, the company has already been on a charm offensive, trying to win over new customers by dropping its prices in a series of markets in the face of falling sales.

"Global EV sales continue to be under pressure as many carmakers prioritize hybrids over EVs," it said.

Chinese models have also flooded the market and undercut Tesla's price point, while still providing reliability.

As a result its share price has fallen by around 40% since the start of this year.

But Tesla has faced similar issues with its stock price in the past - falling as low as $113 in January 2023 - before it more than doubled.

And that is not the end of Tesla's troubles, after the car firm had to recall thousands of its new Cybertrucks over safety concerns.

Job cuts

Despite plans to bring forward new models originally planned for next year the firm is cutting its workforce.

Tesla said it would lose 3,332 jobs in California and 2,688 positions in Texas, starting mid-June.

The cuts in Texas represent 12% of Tesla's total workforce of almost 23,000 in the area where its gigafactory and headquarters are located.

However, Mr Musk sought to downplay the move.

"Tesla has now created over 30,000 manufacturing jobs in California!" he said in a post on his social media platform X, formerly Twitter, on Tuesday.

Another 285 jobs will be lost in New York.

Tesla's total workforce stood at more than 140,000 late last year, up from around 100,000 at the end of 2021, according to the company's filings with US regulators.

Musk's salary

The car firm is also facing other issues, with a struggle over Mr Musk's compensation still raging on.

On Wednesday, Tesla asked shareholders to vote for a proposal to accept Mr Musk's compensation package - once valued at $56bn - which had been rejected by a Delaware judge.

The judge found Tesla's directors had breached their fiduciary duty to the firm by awarding Mr Musk the pay-out.

Due to the fall in Tesla's stock value, the compensation package is now estimated to be around $10bn less - but still greater than the GDP of many countries.

In addition, Tesla wants its shareholders to agree to the firm being moved from Delaware to Texas - which Mr Musk called for after the judge rejected his payday.

Shining BD