Tesla Q1 results: EV major promises affordable cars; stock rises over 10%

Production Expansion Strategy

The leading electric vehicle (EV) manufacturer plans to increase production by 50% from 2023 to reach its current capacity of close to 3 million vehicles before investing in new manufacturing lines, Tesla said.

"This update may result in achieving less cost reduction than previously expected but enables us to prudently grow our vehicle volumes in a more capex-efficient manner during uncertain times," the company stated.
Tesla recently priced its latest Model 3 performance version vehicle at 335,900 yuan ($46,364.29) in China, with deliveries set to commence in the third quarter of this year.

Challenges acknowledged

During the earnings call on Tuesday (April 23), Tesla executives acknowledged facing various challenges in the first quarter of 2024, including the Red Sea conflict and an arson attack at Gigafactory Berlin. Despite a 55% drop in profits compared to the same period last year, the company cited a decline in cost of goods sold per unit, primarily driven by lower raw material costs.

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Furthermore, Tesla highlighted the continued pressure on global EV sales, with many automakers prioritising hybrids over EVs. However, according to the company’s statement, Tesla remains committed to promoting EV adoption in line with its mission.

While Tesla's stock had experienced a significant decline of 43% since the beginning of the year leading up to the earnings announcement, it surged more than 10% after hours.

Optimus: Tesla's Humanoid Robot Initiative

Tesla, during the earnings call, also made announcements regarding the development of its humanoid robot, Optimus, with Musk stating that it could be ready for sale as early as the end of next year. The company envisions Optimus as a solution for potential labor shortages and aims to deploy it in industries such as logistics, warehousing, retail, and manufacturing to handle repetitive and potentially hazardous tasks.

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During a conference call with investors, Musk shared his anticipation that Optimus would be capable of performing tasks within Tesla's factories by the conclusion of this year.

Workforce reductions

However, Tesla is also facing challenges on the workforce front. In preparation for its quarterly results announcement, the electric vehicle maker revealed plans to lay off 6,020 employees in Texas and California. This move comes amidst efforts to address slowing demand and declining margins, with Musk expected to outline the company's strategy during the earnings call.

Last week, Tesla had already announced a workforce reduction of more than 10% globally, citing pressure from decreased sales and an intensified price competition among electric vehicle manufacturers. Although specific figures were not initially disclosed, Tesla provided details in notices to the states of Texas and California on Monday, per the US labor laws.

According to these notices, Tesla will eliminate 3,332 jobs in California and 2,688 positions in Texas, with the layoffs scheduled to commence on June 14th.

Here are the key highlights from Tesla's earnings report & Musk's conference call with investors:

• Tesla shifts focus to unveil new models by early 2025, opting for existing platforms instead of the previously planned $25,000 model.


• Despite Q1 results missing expectations, Tesla's stock rallied more than 10% in anticipation of new offerings.


• Tesla plans a 50% production increase by 2023 before investing in new manufacturing lines, citing cautious growth amid uncertainty.


• Tesla unveiled plans for the humanoid robot Optimus, potentially ready for sale by late next year to address labor shortages.


• Tesla also announced layoffs of 6,020 employees in Texas and California amidst market challenges, following a global workforce cut of over 10% the previous week.