Tesla plans to expedite the launch of new, more affordable electric vehicles (EVs) following a significant sales decline. The company’s CEO, Elon Musk, has previously indicated that Tesla will release a model priced below £21,500 ($25,000). Despite rumors of abandoning this project in favor of developing a self-driving robotaxi, Tesla has confirmed that it remains committed to introducing a cost-effective model.
Tesla has announced plans to increase its production capacity by 50% from 2023 onwards, without investing in new manufacturing lines. The company will instead focus on producing more affordable vehicles using its existing factories. This decision has been positively received by investors, despite Tesla missing its financial targets. Tesla’s Chief Executive Officer, Elon Musk, was also expected to meet with Indian Prime Minister Narendra Modi to discuss potential investments in an auto factory. However, the meeting was canceled at the last moment due to scheduling conflicts.
Tesla has announced plans to utilize its current factories for the production of new and more affordable vehicles, potentially delaying investments in new plants in Mexico and India. This strategy aims to increase production capacity by 50% without the financial burden associated with establishing new manufacturing lines. Despite missing financial targets in its quarterly results, Tesla shares surged after the announcement, as investors welcomed the prudent approach to vehicle volume growth.
Tesla’s first-quarter net income saw a significant decline of 55%, but the company’s stock witnessed a surge in after-hours trading on Tuesday. This was attributed to the announcement of accelerated production of new, more affordable vehicles. In a letter to investors, the company outlined its plans to start production of smaller and more cost-effective models ahead of previous estimates. These vehicles will utilize innovative vehicle underpinnings and incorporate features from current models. Tesla emphasizes that the manufacturing will occur on the same production lines as its existing products, minimizing the need for hefty capital expenditures. While CEO Elon Musk provided limited details about the new vehicles, he anticipates the commencement of production between late this year and the second half of next year. Despite the positive market response, shares of Tesla remain down by over 40% for the year.
Tesla’s net income for the first quarter of 2024 plummeted by 55%, but its stock price soared in after-hours trading after the company announced plans to move up production of new, more affordable vehicles. The company reported $1.13 billion in net income compared to $2.51 billion in the same period last year. Tesla stated that production of smaller, more affordable models will begin in the second half of next year. The company also mentioned the development of a fully autonomous robotaxi as a driver for future earnings growth. Despite declining sales, Tesla’s revenue remained strong at $21.3 billion. The company’s gross profit margin fell once again, and it anticipates lower vehicle sales growth this year as it prepares for the launch of its next-generation vehicle. However, analysts remain skeptical about the viability of the Full Self-Driving system as a growth catalyst.
