Tesla Q1 Revenue Falls Short of Expectations, Expected to Introduce Budget Model as Early as Next Ye

　　On April 23rd, Tuesday after the US stock market closed, Tesla released its first-quarter financial report for 2024.

　　As one of the “Big Seven” in technology and the world's largest automaker by market capitalization, Tesla's first-quarter “report card” has been eagerly awaited by investors.

　　In the increasingly competitive market for new energy vehicles, the survival environment for car manufacturers has become even more challenging. Tesla's first-quarter revenue decline is the worst in 12 years, with profits halved, and the core automotive business revenue experiencing a negative growth of 13%.

Tesla Q1 Financial Report Data

　　Image Source: Wall Street

　　Tesla's financial report shows that revenue for the first quarter decreased by 9% compared to the same period last year, reaching $21.3 billion, lower than the market's expected $22.3 billion. This is the first year-on-year decline since the second quarter of 2020 during the COVID-19 pandemic and the largest decline since 2012. Compared to the fourth quarter of last year, revenue declined by over 15%, primarily due to a slowdown in global demand for electric vehicles.

　　Some analysts pointed out that this revenue decline is even greater than during the period of the COVID-19 pandemic in 2020. Tesla's profits were affected by pricing strategies and investments in AI, with net profits falling by 55% year-on-year, from the market's expected $1.9 billion to $1.13 billion. Adjusted earnings per share were $0.45, below analysts' expectations. Operating profit also decreased by 56% year-on-year to nearly $1.2 billion, and the operating profit margin dropped from 8.2% in the previous quarter to 5.5%.

　　Additionally, Tesla's capital expenditures increased by 34% to $2.77 billion. Free cash flow for the quarter was -$2.5 billion, leading to a $2.2 billion decrease in cash, cash equivalents, and investments compared to the previous quarter. This was mainly due to a $2.7 billion increase in inventory during the quarter and $1 billion in capital expenditures on artificial intelligence infrastructure, with further increases planned in the coming months to enhance core AI infrastructure capabilities.

　　Tesla's automotive business revenue decreased by 13% year-on-year to $17.34 billion. Meanwhile, revenue from energy production and storage increased by 7% year-on-year to $1.64 billion, with a 140% increase in gross profit, reaching a historical high, and energy storage deployment reaching 4.1 GWh again. Service and other revenue increased by 25% year-on-year to $2.29 billion.

Elon Musk Bullish on FSD Functionality

　　Despite revenue and profits falling below expectations, Tesla CEO Elon Musk reiterated during the earnings call that Tesla is now an AI company. He stated that those who do not believe Tesla can solve the problem of Full Self-Driving (FSD) should not be Tesla investors.

　　Tesla's driving features currently include AP, EP, and FSD. AP stands for Autopilot, which includes both Basic Autopilot (BAP) and Enhanced Autopilot (EAP). FSD, or Full Self-Driving Computer, represents full autonomous driving capabilities.

　　The difference between AP and FSD is that FSD includes all the functions of AP and will introduce features such as automated parking, recognition of traffic lights and stop signs, and autonomous driving on city streets in the future. Tesla is optimistic about the future assistance of FSD for humanity and is allocating most of its human and financial resources to FSD functionality.

　　Musk emphasized that investors cannot truly understand the company unless they experience FSD firsthand. He strongly recommended that anyone considering buying Tesla stock should drive a car equipped with the software and experience the latest version of FSD.

　　At the same time, Musk announced that Tesla will operate millions of “Robotaxi” vehicles in the future, forming a robot taxi fleet similar to Uber's ride-hailing service. Tesla owners will also have the opportunity to rent out their Tesla vehicles for ride-hailing services. More details about Robotaxi are planned to be disclosed in August.

　　Musk also mentioned that negotiations are underway with a major automaker for the authorization of the Full Self-Driving (FSD) system, and it is “very likely” that an authorization agreement will be signed this year. However, Tesla management mentioned that even if an authorization agreement is reached this year, it will take three years to integrate it into other vehicles.

　　Meanwhile, Tesla also released a preview version of calling autonomous driving vehicles through the Tesla app on the social media platform “X.”

　　Image Source: Twitter

　　Sawyer Merritt, an electric vehicle analyst and Tesla investor, stated that data shows FSD is gaining popularity, with Tesla owners' average daily mileage in FSD mode increasing by approximately 250% compared to three months ago, reaching 14.7 million miles.

　　Image Source: Twitter

　　At the current growth rate, Tesla's cumulative FSD mileage can increase by 1 billion miles every 68 days. In comparison, it took Tesla 3.5 years to reach the first billion miles of FSD mileage.

Tesla to Accelerate Introduction of Budget Model

　　During the earnings call, Musk mentioned that the company will expedite the launch of the budget model Model 2. This announcement contradicted previous media reports about canceling Model 2 development, leading to an 8% surge in stock prices after-hours.

　　Some analysts believe that Tesla's plan for the budget Model 2 is crucial for achieving Musk's sales growth target. He stated in 2020 that Tesla aims to sell 20 million cars by 2030, equivalent to twice the current sales volume of the world's largest automaker, Toyota.

　　After the earnings call, the company's stock price further increased, with an overall increase of over 11%. Musk stated that the budget model is expected to be launched in early 2025, or even as early as late 2024. This is because the next generation of product lines will be established on existing production lines, eliminating the need for new factories.