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A long-term price reduction strategy and several “unpredictable problems” have reduced Tesla’s profits – in the first quarter the company earned $1.13 billion (55% less than last year).
The company's total revenue also showed a decrease of 9% – to $21.3 billion.
During the earnings call, Tesla noted that it faced “numerous challenges” in the first quarter, including the conflict in the Red Sea, the arson of the Gigafactory Berlin and the gradual development of the updated Model 3 at its Fremont plant. The company also adds that global electric vehicle sales continue to be under pressure as many automakers turn to hybrid vehicles. On the other hand, this approach means that they continue to buy regulatory loans
Automakers that don't comply with countries' environmental regulations and want to avoid problems with regulators are forced to buy so-called regulatory credits from other companies that meet the requirements – for example, from Tesla, which makes only electric cars – from which Musk's company earned $422 million.
“The rise of electric vehicle adoption worldwide is under pressure, with many other automakers moving away from electric vehicles and pursuing hybrids instead. We believe this is not the right strategy and electric vehicles will eventually dominate the market,” Tesla CEO Elon Musk said during the earnings call.
At the same time, after the publication of financial results, Tesla shares increased by 12% – investors were probably interested in the company's comments regarding future products (in particular, plans to launch several cheap cars in early 2025).
“These new vehicles, including more affordable models, will use aspects of the next generation platform as well as aspects of our current platforms,” Musk said. “And we will be able to produce them on the same production lines where we create the current line of cars.”
Tesla electric vehicle sales have increased over the past few years, reaching a new record of 1.8 million units in 2023. In the first quarter of 2024, the company delivered 386,810 vehicles (20% less than the 484,507 vehicles delivered in the last quarter of 2023 and 8.5% less than the first quarter of 2023).
Right now, the company's only new model is the expensive (and demanding) Cybertruck; The automaker has also released new variations of current models, including the Tesla Model 3 Performance. During a report in January, Musk said production of the smaller, cheaper electric vehicle would begin in late 2025 at the company's Texas plant before expanding to a yet-to-be-built plant in Mexico. Three months later, plans appear to have changed in favor of a robotaxi (built on the platform of a cheaper $25K car), which will likely be unveiled in August.
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A few weeks ago, Tesla cut 10% of its workforce and began a restructuring aimed at autonomy. Two senior executives—Drew Baglino, Tesla's senior vice president of powertrain and energy, and Rohan Patel, vice president of public policy and business development—also left the company. Tesla CFO Vaibhav Taneja expects savings from workforce reductions to exceed $1 billion a year.
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