Tesla reported a sharp decline in its quarterly profits, facing a fiercely competitive market and implementing layoffs. During the first quarter of 2023, the electric vehicle leader earned $1.13 billion, marking a 55% drop compared to the previous year’s quarter. This decrease occurred despite revenues reaching $21.3 billion. The company’s billionaire CEO, Elon Musk, defended the recent job cuts as a necessary measure to streamline operations for Tesla’s future growth. Tesla has announced the dismissal of approximately 14,000 employees.
In a conference call with analysts, Tesla’s Chief Financial Officer Vaibhav Taneja revealed that the job cuts, exceeding 10%, will result in annual cost savings of over $1 billion. Additionally, Tesla intends to expedite the launch of new models, moving the timeline forward from the previously communicated start of production in the second half of 2025. Among these upcoming models will be more affordable options. Musk, speaking at the outset of Tuesday’s conference call, indicated that production for these vehicles could commence in early 2025 or late 2024. He emphasized that the vehicles will incorporate elements from both Tesla’s next-generation platform and its current platform, making their production less dependent on new factories or extensive production line overhauls.
Tesla’s first-quarter net income experienced a significant drop of 55%, while its stock price surged in after-hours trading on Tuesday due to the company’s announcement regarding the accelerated production of new, more affordable vehicles. Despite the profit decline, Tesla generated $1.13 billion from January to March, compared to $2.51 billion in the same period last year. Tesla reported a 9% decrease in first-quarter revenue to $21.3 billion, primarily driven by a decline in global sales due to heightened competition and reduced demand for electric vehicles. The company’s gross profit margin has also decreased, reaching 17.4% compared to 19.3% a year ago and a peak of 29.1% in the first quarter of 2022. Tesla’s stock value increased by 11% in after-hours trading on Tuesday but has declined by more than 40% this year, contrasting with the S&P 500 index’s approximate 5% gain over the same period.
