20240424 tesla
Tesla reported profits of $1.1 billion, down 55 percent from the year-ago quarter on revenues of $21.3 billion, down nine percent. Image Credit: Reuters

New York: Tesla reported a big drop in quarterly profits Tuesday, pointing to elevated pressure on the electric vehicle market that has led to deep cost-cutting.

But shares of Elon Musk's EV company rallied after Tesla signaled pledged to "accelerate" new more affordable autos - something Wall Street analysts have been clamoring for.

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Tesla reported profits of $1.1 billion, down 55 per cent from the year-ago quarter on revenues of $21.3 billion, down 9 per cent. The results come as investors have sought greater strategic clarity from Musk amid a weaker performance and as the mercurial Tesla boss has touted Robotaxis as a venture at a time when there is rising skepticism about autonomous technology.

The company, which recently announced job cuts, has also undertaken a recall of its Cybertruck due to an acceleration problem. Tesla is committed to "company-wide cost reduction" as part of an effort to achieve "profitable growth", it said.

In spite of the belt-tightening implied in those statements, Tesla's report did provide some news likely to cheer investors, saying it planned to "accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025".

The new vehicles will include "more affordable models," Tesla said. The statement comes on the heels of speculation that Tesla is shelving plans for the Model 2, the unofficial name of what is expected to be a mass-marketed, lower-priced vehicle.

While Tesla's statements about new vehicles boosted shares, "the company still hasn't offered timelines for these new vehicles, which could take years to come to market at a time when EV competition in various markets is intensifying," said Gadjo Sevilla, senior technology analyst at Emarketer.


Tesla also said Tuesday it will continue to pursue a "revolutionary" manufacturing strategy on a "purpose-built robotaxi product."

Sevilla warned against the venture, saying "entering the emerging autonomous robotaxi segment at a time when it has been under scrutiny for safety could be another misstep for Tesla, especially considering it has had its share of safety concerns and investigations."

Heading into 2024, Tesla watchers were already girding for a tougher path, with Musk's once-dominant leadership in EVs facing more competition from rivals, resulting in a series of price cuts.

But things have been bumpier than expected.

After disclosing on April 2 a disappointing 8.5 percent drop in first-quarter deliveries, Tesla last week announced plans to lay off more than 10 percent of its staff.

That news was quickly followed by Tesla's plan to revive a $56 billion compensation package for Musk after a court struck it down.

Then, late last week, Tesla announced a recall of its Cybertruck due to an acceleration problem.