Tesla CEO Elon Musk visits the company's gigafactoy in Gruenheide near Berlin in March as production resumed. The company blamed a shutdown at the plant along with global supply issues and competition from hybrids for a more than 50% drop in first quarter profit. Photo by Filip Singer/EPA-EFE
April 24 (UPI) -- Profits at electric car giant Tesla more than halved to $1.13 billion in the first quarter compared with $2.51 billion in the same period in 2023 with the company blaming the result on global supply issues, an attack on its European battery plant and competition from hybrids.
Numerous challenges including supply chain disruptions from ships being unable to use the Suez Canal due to attacks in the Red Sea, a suspected arson attack that shuttered its Berlin Gigafactory and a shift to early production of an updated version of its key Model 3 saw deliveries fall by a fifth, Tesla said in results published Tuesday.
Tesla delivered 386,810 cars in the quarter -- 96% of which were Model 3s -- compared with 484,507 in the October to December period and down 8.5% on Q1 in 2023, with total revenue falling 9% to $21.3 billion compared with $23.3 billion in the same period last year. Revenue from its core car business took an even bigger hit, plunging 13% to $17.4 billion.
The disappointing results were in spite of falling costs at the company which is among only a handful of carmakers making a profit on EVs amid a softening in demand for pure-electric and relentless pricing pressures from Asian rivals, China in particular.
CEO Elon Musk, however, portrayed the results as blip promising that the company's upcoming April to June quarter would be "a lot better" as the impact of recent challenges faded and cost-saving efficiencies were implemented.
The company would bring forward the launch of new "more affordable" electric models as early as the end of the year, Musk announced in a conference call on the results which were released after the market closed Tuesday.
The new vehicles would be based on Tesla's existing production platform with "aspects" of a next-generation platform, allowing a more streamlined "unboxed" production method that would help further cut costs, he said.
"This is not contingent on a new factory or massive new production lines, it'll be made on our current production lines much more efficiently."
Musk also re-stated his rock-solid commitment to and belief in EV technology despite announcing plans last week to lay off 10% of Tesla's workforce, amounting to about 14,000 people.
"The EV adoption rate globally is under pressure and a lot of other auto manufacturers are pulling back on EVs and pursuing plug-in hybrids instead," Musk said. "We believe this is not the right strategy, and electric vehicles will ultimately dominate the market."
Musk's leadership has been called into question on worries his other business interests, principally X, the social media platform previously known as Twitter, consume too much of his available focus.
Tesla is currently seeking to reinstate Musk's $56 billion compensation package after a Delaware judge struck it down in January, announcing the plan in an April 19 proxy Securities and Exchange Commission filing which claimed the court's decision created a "fundamental problem for the company."
