Tesla’s profits fell by more than half

Tesla’s profits fell by more than half

Tesla has announced its profit fell sharply in the first three months of the year to $1.13bn (£910m), compared to $2.51bn in 2023.

It caps a difficult period for electric vehicle (EV) makers, which – faced with declining sales – have announced thousands of layoffs.

Boss Elon Musk remains bullish on its prospects, telling investors the launch of the new model will be brought forward.

Its share price has risen but analysts say it continues to face major challenges, including from low-cost rivals.

The company has suffered from declining demand and competition from cheaper Chinese imports which has caused its share price to fall by 43% compared to 2024.

Figures for the first quarter of 2024 revealed revenue of $21.3bn, down from analysts’ forecasts of just over $22bn.

But Tesla’s decision to bring the launch of new models from the second half of 2025 sent its shares up nearly 12.5% in after-hours trading.

It did not disclose pricing details for the new vehicle.

However, Mr Musk made it clear that he also had bigger ambitions, touting Tesla’s AI credentials and plans for self-driving vehicles – and even thinking it was just a car company was “the wrong framework.”

“If someone doesn’t believe Tesla is going to solve autonomy I think they shouldn’t be an investor,” he said.

Such sentiment has been questioned by analysts though, with Deutsche Bank saying driverless cars face “technological, regulatory and operational challenges.”

Some investors are asking the company to focus on producing mass-market EVs at lower prices.

However, Tesla has already gone on a charm offensive, trying to win new customers by lowering its prices in a series of markets in the face of falling sales.

Tesla cuts prices in major markets as sales fall
It also said the situation is not unique.

“Global EV sales continue to be under pressure as many automakers prioritize hybrids over EVs,” he said.

Despite plans to bring in a new model originally planned for next year the firm is reducing its workforce.

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

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

However, Mr. Musk tried to downplay the move.

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

Another 285 jobs will be lost in New York.

Tesla’s workforce totaled more than 140,000 at the end of last year, up from around 100,000 at the end of 2021, according to the company’s filing with US regulators.

Salary musk
The car firm also faces other issues, with the fight to get Mr Musk compensated still dragging on.

On Wednesday, Tesla asked shareholders to vote on a proposal to accept Mr Musk’s compensation package – once valued at $56bn – which was rejected by a Delaware judge.

The judge found Tesla’s directors had breached their fiduciary duty to the firm by giving Mr Musk the payment.

Due to the fall in Tesla’s share value, the compensation package is now estimated to be around $10bn less – but still larger than the GDP of many countries.

In addition, Tesla wants its shareholders to agree to the firm moving from Delaware to Texas – which Mr Musk requested after a judge rejected his payday.