The carmaker experienced its most significant decline in sales in over ten years. Tesla is expediting its plans to introduce a range of more affordable vehicles as the electric vehicle manufacturer led by Elon Musk aims to compete with a surge of low-cost Chinese rivals. The company announced its intention to “accelerate the launch of new models… including more affordable models” with production slated to commence next year.
Despite reporting its largest sales drop in more than a decade, Tesla’s shares surged by over 5 percent in after-hours trading. Investors have eagerly anticipated news of a cheaper electric car, estimated by Mr. Musk to be priced around $25,000 (£21,500), although concerns have been raised that his focus may be diverted towards an autonomous “robotaxi.”
Tesla stated on Tuesday evening, “We have revised our future vehicle lineup to expedite the introduction of new models ahead of our previously announced start of production in the second half of 2025. These new vehicles, including more affordable models, will incorporate elements of the next-generation manufacturing platform as well as components from our current platforms and will be capable of being produced on the same manufacturing lines as our current vehicle lineup. This adjustment may result in achieving less cost reduction than previously anticipated but allows us to prudently increase our vehicle volumes… during uncertain times.”
This announcement coincided with Tesla reporting a 55 percent decline in profits to $1.1 billion and an 8.7 percent decrease in revenues to $21.3 billion for the first three months of the year, marking the most significant drop in over a decade. The company has faced challenges including fluctuating consumer demand for electric vehicles, elevated interest rates affecting purchase affordability, and the closure of its German factory following an arson attack by environmental activists. Prior to last night’s results, Tesla’s shares had plummeted by over 40 percent this year.
As a pioneer in electric vehicles, Tesla has encountered pressure from both waning consumer demand for battery-powered cars and heightened competition, particularly from Chinese manufacturers. While briefly surpassed as the world’s largest electric vehicle seller by volume by China’s BYD at the end of last year, Tesla reclaimed the title at the beginning of 2024. BYD and other Chinese manufacturers have significantly reduced the cost of new electric vehicles.
Mr. Musk remarked that traditional car manufacturers are scaling back their electric vehicle initiatives in favor of plug-in hybrids, a strategy he believes to be misguided, asserting that electric vehicles will ultimately dominate the market.
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