Despite declining profits and challenges, Tesla remains a leader in the transition to electric vehicles and plans to launch new affordable models in the coming years.
Tesla Strategy
Declining Profits
In the first quarter of 2024, Tesla recorded a 55% drop in profits compared to the previous year, earning $1.13 billion. Total revenues also fell 9% to $21.3 billion. This was the result of a long-term strategy to reduce prices and a number of unforeseen problems.
Problems and Challenges
Tesla faced many challenges in the first quarter, including a conflict in The Red Sea, the burning of the Gigafactory Berlin and the gradual deployment of the updated Model 3 at the Fremont plant. In addition, global sales of electric vehicles are under pressure as many automakers turn to hybrid vehicles. However, this approach means they are forced to purchase regulatory credits from companies that comply with environmental regulations, such as Tesla, which earned $422 million from it.
Electric vehicle strategy
Tesla CEO Elon Musk said he believes the strategy to transition to hybrids wrong because electric vehicles will eventually dominate the market. The company plans to launch several affordable electric vehicle models in early 2025, using aspects of both the new and current platforms.
Sales and new models
Despite the challenges, Tesla electric vehicle sales continue to grow, reaching a record 1.8 million units in 2023. In the first quarter of 2024, the company delivered 386,810 vehicles. Currently, the only new model is the expensive Cybertruck, but Tesla has also released new variations of existing models, such as the Model 3 Performance. Production of the more affordable $25,000 model is expected to begin in late 2025 at the Texas plant before expanding to a new plant in Mexico. A robotaxi presentation is also planned in August.
Restructuring and layoffs
In recent weeks, Tesla has cut 10% of its workforce and embarked on a restructuring focused on autonomy. Two senior executives also left the company. Tesla's chief financial officer expects savings from the workforce reduction to exceed $1 billion a year.
Glossary
- Tesla is an American company that produces electric vehicles and energy storage systems.
- Elon Musk is an entrepreneur, engineer, inventor and visionary, CEO and product architect of Tesla.
- Cybertruck is an all-electric pickup truck manufactured by Tesla.
- Model 3 is a mid-range electric car produced by Tesla.
- Gigafactory Berlin is a Tesla electric vehicle production plant in Germany.
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Answers to questions
What are the main reasons for Tesla's earnings decline in the first quarter of 2024?
How does Tesla make money by selling regulatory credits?
What future plans does Tesla have for new models?
How have Tesla electric vehicle sales changed lately?
What changes have occurred in Tesla's leadership and structure?
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Discussion of the topic – Tesla is at a crossroads: falling profits and challenges in the hybrid market
Tesla faced serious challenges at the start of 2024, with its profits down 55%. Elon Musk blames growing competition from hybrid cars, as well as a number of unforeseen circumstances, including the conflict in the Red Sea, arson at the Berlin plant and delays with the updated Model 3.
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Хуан
Musk's performance is intriguing, but I'm concerned about the long term. How does Tesla plan to remain competitive as more affordable electric vehicles from other brands increase? 🤔
Эмили
I'm impressed that Tesla continues to focus on pure electric vehicles despite the demand for hybrids. Their commitment to sustainability is commendable. 💚
Штефан
Of course, falling profits are a concern, but I trust Musk's strategy. New budget models are a great step to expand the availability of electric vehicles. 🚘
Клаудия
What about supply and production issues? The factory fire and Model 3 delays are major challenges. Tesla must ensure stability before launching new models. 🏭
Виктор
All this investment of time and money... Why even bother with electric cars? Gasoline cars are much more convenient and practical! 🚗💨
Эмили
Victor, I understand your point of view, but I cannot agree with it. Electric cars are the future, they are environmentally friendly and economical in the long run. And Tesla is a leader in this area. 🌍⚡
Штефан
Emily is right, electric cars have huge potential. Yes, there are infrastructure problems, but companies like Tesla are working to solve them. It is the matter of time. 🔋🔌
Хуан
I think Tesla is too focused on luxury models. The new budget options are the right move, but they also need to work on affordability for the mass market. 💰