Tesla Inc on Tuesday reported a big drop in quarterly profits amid an increasingly cutthroat electric vehicle (EV) market, but shares rallied as CEO Elon Musk pledged to accelerate plans for more affordable EVs.
Tesla reported profits of US$1.1 billion, down 55 percent year-on-year on revenue of US$23.3 billion, down 9 percent, as the company described EV sales as “under pressure.”
However, shares rocketed up more than 11 percent in after-hours trading after Tesla pledged to “accelerate” new more affordable vehicles — something Wall Street analysts have been clamoring for.
Photo: AFP
The results, which lagged analyst estimates, came after the company last week announced the layoffs of about 14,000 workers.
Cutting headcount by more than 10 percent would save Tesla more than US$1 billion annually in costs, chief financial officer Vaibhav Taneja said on a conference call with analysts.
In spite of the belt-tightening, 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 would include “more affordable models,” Tesla said.
At the outset of Tuesday’s conference call, Musk said production of the vehicles would start early next year or late this year, up from the prior time frame of the latter half of next year.
The vehicles “will use new aspects of the next generation platform as well as aspects of our current platform,” Musk said. “So it’s not contingent on any new factory or massive new production line.”
Musk said more details would be released in August.
The Tesla CEO spoke at length about the promise of the company’s autonomous ventures, saying valuing the EV maker like a car company is the “wrong framework.”
“If somebody doesn’t believe Tesla is going to solve autonomy I think they should not be an investor,” he said.
The statement about new vehicles 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 time lines for these new vehicles, which could take years to come to market at a time when EV competition in various markets is intensifying,” Emarketer senior technology analyst Gadjo Sevilla said.
Tesla also on Tuesday said it would continue to pursue a “revolutionary” manufacturing strategy on a “purpose-built robotaxi product.”
Leading analysts have expressed skepticism about the embrace of the robotaxi venture.
Musk’s announcement that the robotaxi would be unveiled in August “in no way means the technology is ready,” Deutsche Bank AG analysts said.
“We worry there is considerable execution risk to the development of robotaxi technology and that a fleet deployment could be years away,” Deutsche Bank analysts said.
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