Tesla continues to show disappointing financial results, and Elon Musk continues to tease drivers and investors waiting for an answer to the cheap Chinese electric cars.
This week, Tesla released its results for the first quarter of 2024. We already knew that the company only delivered 387,000 cars, an 8% decrease, after producing 433,000, resulting in a large inventory of unsold cars. However, this did not prevent Tesla from surpassing BYD and reclaiming its position as the world's largest electric car manufacturer.
Following more price cuts in the country this week as part of the global price war, Tesla managed to miss all financial expectations for its performance. Tesla reported an operating profit of $1.17 billion, while analysts expected $1.62 billion. The company recorded revenues of $21.3 billion and a profit of 45 cents per share, while estimates were for revenues of $22.3 billion and a profit of 52 cents per share.
During the investor call following the release, Musk avoided a direct question about the promised cheap model, priced at $25,000, compared to the current $40,000 for the base Model 3 in the US. Tesla's CEO, who denied a Reuters report earlier this month, in which it was claimed that he canceled the "Model 2" – as the affordable model was called in the media – in favor of advancing driverless cars, refrained from committing to the production of the model, and said that further details about it and about Tesla's robotics will be provided on August 8th.
Tesla is not expected to launch a new unmanned model, but to allow upgrades of existing models to a higher level of autonomous driving. However, this capability requires approval from regulators worldwide in order to operate on the road, and there are already several lawsuits and investigations against Tesla regarding its current Autopilot system.
Regarding the discounted model, Musk agreed to say only that "we have updated our future model plans to accelerate the launch of new models, which we promised in the past to start production in the second half of 2025. Now we expect this to happen in early 2025, and maybe even by the end of this year. The new models, including discounted models, will integrate suppliers from our next platform, alongside the current one. We will be able to manufacture them in existing factories as part of the current products."
Implication: The discounted model could be an additional version of the Model 3, with more efficient production, a smaller battery, or other changes. Musk said that Tesla will be able to produce 3 million cars per year in its existing production lines, which currently produce about 1.8 million cars per year. He also revealed that the production rate of the Cybertruck has already reached 1,000 units per week, an improvement, but still modest. He also disclosed that Tesla is in talks with another car manufacturer considering purchasing its FSD system for autonomous driving.
Tesla announced a year ago the establishment of a fifth factory in Mexico, which will join those in California and Texas in the United States, as well as Shanghai in China and Berlin in Germany. The Mexican factory, with cheap labor costs, was supposed to produce the affordable model, but it is unclear when it will be established.
Musk also canceled a scheduled meeting this week with the Prime Minister of India, Narendra Modi, where he was supposed to announce an investment of 2-3 billion dollars in a new factory in the country to produce affordable models. At the same time, two senior Tesla executives engaged in the Indian market announced their departure from the company. Musk stated that he had to cancel his visit to India due to workload, and he will continue to work on it later this year.