Tesla profits drop 55% as Elon Musk dodges cheap car questions

🌈 Abstract

The article discusses Tesla's financial results for the first quarter of 2024, which were significantly worse than the previous year. Key points include:

• Tesla's car deliveries dropped by 8.5% year-over-year, and the company had to cut prices heavily, impacting its revenue and profits.
• Tesla's net profit fell by 55% to $1.1 billion, and its free cash flow dropped by 674%.
• Tesla's profit margin has declined to just 5.5%, nearly half the industry average.
• Tesla plans to continue cutting costs on its existing Model 3 and Model Y rather than developing a new, more affordable "Model 2" vehicle.
• Tesla is focusing more on AI development, spending $1 billion on GPUs in Q1, rather than new vehicle models.

🙋 Q&A

[01] Tesla's Financial Results

1. What were the key financial metrics that showed Tesla's poor performance in Q1 2024?

• Total revenues were down 9% year-over-year
• Gross profits were down 18%
• Net profit fell by 55% to $1.1 billion
• Net cash dropped by 90%
• Free cash flow declined by 674% year-over-year
• Profit margin declined to just 5.5%, nearly half the industry average

2. How did Tesla's car deliveries and inventory change in Q1 2024?

• Car deliveries dropped by 8.5% year-over-year
• Tesla's inventory of unsold cars grew from 15 days to 28 days, accounting for a third of the cars it built in the quarter

3. What was Tesla's strategy in response to the poor financial results?

• Tesla engaged in heavy price cuts on its vehicles
• The company plans to continue cutting costs on its existing Model 3 and Model Y rather than developing a new, more affordable "Model 2" vehicle
• Tesla is focusing more on AI development, spending $1 billion on GPUs in Q1, rather than new vehicle models

[02] Tesla's Future Plans

1. What did Tesla say about plans for a more affordable "Model 2" vehicle?

• Tesla CEO Elon Musk rebuffed questions about a cheaper Tesla, saying "I think we've said all we will on that front"
• Instead, Tesla plans to continue cutting costs on its existing Model 3 and Model Y

2. How does Tesla plan to develop its future vehicle platforms?

• Tesla says it "will use aspects of the next-generation platform as well as aspects of our current platforms, and will be able to be produced on the same manufacturing lines as our current vehicle lineup"
• However, there is no clear timeline on when replacements for the Model 3 and Model Y might appear

3. What is Tesla's focus for the future, according to the article?

• Tesla is focusing more on AI development, spending $1 billion on GPUs in Q1, rather than developing new vehicle models
• Elon Musk maintains that Tesla's future is in AI, rather than new car platforms